There was anger and a degree of disbelief when it was revealed on Wednesday that a company founded and chaired by a wealthy campaigner against gay rights would be lead sponsor of the prize this year.

Stagecoach South East had been brought on board by this year’s host venue, Turner Contemporary in Margate, which saw the local bus company as a good match.

It appears that nobody joined the dots to the company’s boss, Sir Brian Souter, one of Scotland’s richest men who used his wealth to fund a campaign to retain the anti-gay law section 28 and has warned that society may implode if “traditional” marriage fails.

It is understood that a letter was being prepared by artists, to be signed by former Turner prize winners, objecting to Stagecoach South East’s involvement.

At 10pm on Thursday Tate, Turner Contemporary and Stagecoach South East announced that the sponsorship had been swiftly ended.

The galleries’ statement said: “Turner Contemporary and Tate’s highest priority is to show and celebrate artists and their work. The Turner prize celebrates the creative freedoms of the visual arts community and our wider society. By mutual agreement, we will not proceed with Stagecoach South East’s sponsorship of this year’s prize.”

The bus company said: “Stagecoach South East has mutually agreed with Turner Contemporary and Tate not to continue with the company’s sponsorship of the 2019 Turner prize. We are absolutely committed to diversity in our company, however we do not want anything to distract from celebrating the Turner prize artists and their work.”

The gay rights campaigner Peter Tatchell had expressed surprise and disappointment at the partnership “given Brian Souter’s history of backing the anti-gay law, section 28”.

“Surely there must be other less tainted potential sponsors? The arts is a LGBT-friendly profession and should not be colluding with companies whose bosses support homophobic discrimination,” said Tatchell.

Sponsorship of the arts is a difficult area. Because of government and local authority spending cuts, arts organisations are under intense pressure to raise more money from private sources.

But organisations such as the British Museum, National Portrait Gallery and the Royal Shakespeare Company are under pressure to drop BP as a sponsor. The defence company BAE Systems withdrew its sponsorship of last summer’s Great Northern Exhibition after protests.

In the case of the 2019 Turner prize, the questions are likely to be about what due diligence was carried out by Tate and Turner Contemporary to conclude that Stagecoach South East was a good match.

The sponsorship row had overshadowed what the Guardian’s Adrian Searle had suggested was this year a thrilling contest. “I like this shortlist a lot, and there’s not a dud among them,” he wrote.

The four nominated artists are Lawrence Abu Hamdan, Helen Cammock, Oscar Murillo and Tai Shani. All will now make work for the annual Turner prize exhibition, which opens in Margate in September. The £25,000 winner will be announced on 3 December.