The famous Hollywood sign has been saved from being spoiled by property development by a last-minute donation from Playboy mogul Hugh Hefner.

The soft-porn magnate gave $900,000 (£580,000) to the fund which was set up to stop the site being developed.

The sign is owned by the city, but the property around it belongs to a group of Chicago-based investors.

California Governor Arnold Schwarzenegger described the news as "the Hollywood ending we hoped for".

Governor Schwarzenegger said Mr Hugh Hefner's donation and a $500,000 matching grant brought to an end a $12.5m fund-raising campaign.