Sheikh Mohammed Sayyid Tantawi, who has died aged 81, was a moderate, sometimes progressive voice at the apex of Islamic scholarship during a period when such measured tones tended to be drowned out on the international scene by his more militant rivals.

As the head of Al-Azhar University in Cairo, the pre-eminent seat of learning in the Sunni Muslim world, he argued for secular politics, advancement of women's rights and engagement with both the West and Israel. He was a fierce critic of al-Qaeda and condemned the attacks of September 11 2001.

Given his position, his fatwas – religious edicts – were due more weight than those issued by minor scholars (whose fatwas of a draconian nature were often blasted across newspaper headlines). Tantawi's own edicts, by contrast, gave comfort to those in the Middle East and beyond who hoped that a Muslim identity was compatible with material advancement and, to some extent, "Western" values.

But his loyalty to Hosni Mubarak, the autocratic Egyptian president, which seemed sometimes to verge on slavish, provoked criticism and contempt at home and abroad.

Unwillingly but inevitably, Tantawi helped unite much of the opposition to Middle Eastern, pro-American dictatorships (such as the one he served) behind the conservative forces of the Muslim Brotherhood and their allies and offshoots. Moderate attitudes towards religion and society favoured previously by liberals and nationalists came to be associated with him – and through him with authoritarian rule and American foreign policy.

This was not helped by a lack of political sure-footedness which might have been endearing in a less political cleric.

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On one occasion, he was accused of removing his shoes and using them to hit journalists who asked him difficult questions. After extending his condemnation of suicide attacks to their use in the Palestinian cause, he then appeared to backtrack.

In late 2009, he launched a campaign against the niqab – the full-face veil increasingly worn by women in Egypt – by personally tearing away that of a teenage girl at a school affiliated to Al-Azhar he was visiting, much to the shock of all concerned.

In 2008, he attempted to deny shaking the hand of Shimon Peres, the Israeli president, at a United Nations interfaith forum. When a photograph of a distinctly firm handclasp was published, he claimed he had failed to recognise the Nobel peace laureate, a dominant figure in Israel's peacemaking efforts over the last two decades.

Born on October 28 1928 in the village of Salim, Mohammed Tantawi came from a traditional family in rural upper Egypt. The eldest of six brothers, he had memorised the Koran by his teens and, at the age of 15, joined the Alexandria Religious Institute.

A series of academic positions in Egypt and abroad followed, culminating in five years spent at the Islamic University of Medina, in Saudi Arabia.

In 1986, he was appointed Grand Mufti of Egypt by President Hosni Mubarak. The two men formed a close bond: they were of similar age and temperament, though whether Tantawi was truly a believer in the president's practice of secular, nationalist, authoritarian government, or merely allowed himself to be co-opted, is hotly disputed.

Under reforms initiated in the 1960s by Abdul Gamal Nasser, the charismatic but dictatorial founder of modern Egypt, appointments to the country's senior clerical positions had come under direct political control. These included those of the Grand Mufti and of the Grand Sheikh of Al-Azhar, a position to which Tantawi was elevated in 1996.

When Nasser's popularity in the Arab world was at its height, this interference did not harm the clerisy's image of integrity and authority. But as Egypt's influence and, later, President Mubarak's reputation waned, the damage by association became clear.

This was a particular blow for Al-Azhar. Established in the 10th century and long the Oxford or Harvard of Islamic teaching, it was, by the time of Tantawi's ascendancy, losing ground to puritanical Salafi establishments which replaced emphasis on historic schools with a more direct, personal contact with the Koran and faith as practised in the earliest times.

That these doctrines were spread by preachers themselves often funded by wealthy Gulf Arabs did not lessen their appeal.

Tantawi saw the threat, and his first steps at Al-Azhar were to lessen the influence of its conservative elements, which were already urging a greater independence from Mr Mubarak's grip. From then on he issued fatwas promoting the secular modernism with which Egypt had long been associated but which was becoming increasingly unpopular as it failed to give rise to comparably Western standards of living for Egypt's fast-growing, impoverished population.

He said that charging interest on bank loans, long condemned as usury, or riba, was in fact ribh, or just gaining profit, which was allowable. This eventually allowed the development of a mortgage industry. He moved on to popular culture, backing television game shows such as Who Wants to be a Millionaire.

As attitudes towards women became more traditional, he asserted their rights. He said women could take leading government and judicial positions. The practice of female circumcision, often condemned but still widely practised, he described as "un-Islamic", declaring that he had not inflicted it on his own daughter. He argued for easier divorce for women, said that abortion was permissible in cases of rape, and came to his greatest prominence in the last two years as debate raged about the growing tendency of Egyptian women to wear the niqab.

He understood the political implications: for decades, the practice of even wearing the hijab – the headscarf – had been declining, particularly in middle-class Egyptian society. But as more and more women, including students, resumed its use from the 1980s onwards, those who wished to show their greater modesty or devotion – or just protect themselves from sexual harassment – began wearing the full face-veil. It came to be associated, at least in the government's mind, with support for fundamentalist Islam.

After issuing a fatwa allowing girls in France to go uncovered, in accordance with the ban there on the hijab in schools, he then turned to his own foundation. Visiting a secondary school affiliated to al-Azhar in Cairo in October last year, he found a girl wearing the niqab and, when she failed to remove it, did so for her.

His actions unleashed widespread complaints from across the Arab world, with many arguing that to defend women he was denying women's right to choose.

In the West, he will be remembered for encouraging relations with other faiths; he signed an agreement to promote dialogue with the Archbishop of Canterbury in 2002. Those who met him will remember him either for his personal generosity and soft-spoken, even somnolent personality or, especially if they happen to be journalists, as a man capable of flying into violent rages.

Apart from the shoe-wielding incident, he stood apart from liberal allies on the issue of censorship, which he supported. He once demanded that those convicted of libel be flogged. The editors of the Israeli newspaper that published the photograph showing him with Mr Peres he called lunatics, liars, and the "sons of 60", an Arabic expression in which the 60 implicitly refers to dogs and prostitutes.

His major work of scholarship was a multi-volume exegesis of the Koran, which took 10 years to complete but did not receive widely favourable reviews.

Sheikh Tantawi died suddenly of a heart attack on March 10 while boarding an aeroplane in Saudi Arabia. He was buried in Medina.

He is survived by two sons and a daughter. His wife predeceased him.