Playboy boss Hugh Hefner has stepped in to save the iconic Hollywood sign following a dispute with property developers.

He gave the final $900,000 (£580,000) needed to be raised by a multimillion-dollar campaign to buy back a piece of land adjacent to the giant white letters.

Investors who own the site had indicated they would sell to developers to build luxury properties, threatening the view of the famous sign.

Speaking at a news conference below the landmark with California Governor Arnold Schwarzenegger, 84-year-old Hefner said: "My childhood dreams and fantasies came from the movies, and the images created in Hollywood had a major influence on my life and Playboy.

"The Hollywood sign is Hollywood's Eiffel Tower and I'm pleased to help preserve such an important cultural landmark."

Mr Schwarzenegger added: "Of all the iconic landmarks in the world, the Hollywood sign is truly one of the most recognisable symbols of the California dream and land of opportunity."

Other private donors who helped raise the $12.5m fund required to save America's most famous letters included actor Tom Hanks, director Steven Spielberg and jewellery company Tiffany.

The Hollywood sign on Mount Lee originally read "Hollywoodland" and was initially raised to promote a housing development in 1923.

The last few letters deteriorated in the late 1940s, leaving the "Hollywood" banner that now looks set to remain unblighted for many years to come.