A British scientist whose work has touched on some of the greatest questions in physics, from the nature of the big bang to the size of physical reality, has won the largest monetary prize on the planet.

Sir Martin Rees, the astronomer royal and former president of the Royal Society, was named as the recipient of the £1m annual Templeton prize in London on Wednesday. He will be awarded the prize by Prince Philip, the Duke of Edinburgh, at a private ceremony at Buckingham Palace in June.

The award has drawn criticism from some scientists, including the Oxford evolutionary biologist Richard Dawkins, who claim that the Templeton Foundation – which funds the prize – blurs the boundary between science and religion and makes a virtue of belief without evidence.

Set up in 1973 by the late John Templeton, a Wall Street billionaire who described himself as "an enthusiastic Christian", the prize honours a living person who has made "exceptional contributions to affirming life's spiritual dimension". Templeton stipulated that the cash value of the award must always be higher than the Nobel prizes.

Previous winners have included Mother Theresa, the US evangelist Billy Graham, and last year, a molecular biologist and former Dominican priest, Francisco Ayala, who advised Bill Clinton and helped overturn legislation in Arkansas that would have permitted schools to teach Creationsim alongside evolution in science classes.

Lord Rees, a churchgoer who neither believes in God nor subscribes to any religious dogma, said he attends chapel on a regular basis as Master of Trinity College, Cambridge, as part of a "traditional ritual". He also cites the choir – rated fifth in the world by Gramophone magazine – as a reason for his attendance.

"Doing science made me realise that even the simplest things are hard to understand and that makes me suspicious of people who believe they've got anything more than an incomplete and metaphorical understanding of any deep aspect of reality," he told the Guardian. "I participate in occasional religious services which are the customs of the society I grew up in. I'm not allergic to religion."

Rees was raised in the traditions of the Anglican church and thrived at Cambridge University under the supervision of Dennis Sciama, one of the most influential physicists of the postwar era, who counted Stephen Hawking among his other students. Rees was one of the first to work on big bang theories, which in the early 1960s superseded ideas of an everlasting, steady state universe.

In 2003, Rees put humanity's odds of surviving the next 100 years at 50-50, citing threats from high-tech catastrophes to environmental impact in his book, Our Final Century.

Speaking ahead of the announcement, Rees criticised the confrontational stance that Dawkins and other "professional atheists" take in debates over science and religion. "I think all of us are concerned about fanaticism and fundamentalism and we need all the allies we can muster against it," he said.

"If you are teaching Muslim sixth formers in a school and you tell them they can't have their God and Darwin, there is a risk they will choose their God and be lost to science," Rees said. In a previous spat over Rees's open attitude to religious matters, Dawkins labelled the Cambridge cosmologist a "compliant quisling".

Rees launched another attack on his Cambridge colleague Stephen Hawking, who in the week his latest book hit the shelves last year declared there was no need for a creator God. "I know Stephen Hawking well enough to know that he has read little philosophy and less theology, so I don't think his views should be taken with any special weight," Rees said. "I'm not prepared to pronounce on these things. I think it's rather foolish when scientists do."

In the journal Nature last month, Jerry Coyne, an evolutionary biologist at the University of Chicago, said the Templeton Foundation was "sneakier than the Creationists" and alleged that the organisation tried to instil religious values in science. "It claims to be on the side of science, but wants to make faith a virtue," Coyne said.

Sir Harry Kroto, a British scientist who won the Nobel prize for chemistry in 1996 and works at Florida State University, told the Guardian that the "congenital wishful thinking" embodied by religion made it incompatible with science. "There is no problem, with a million-quid lure to hook a few eminent scientists, to say that they personally see no conflict between science and religion, but they are suffering from a form of intellectual schizophrenia," he said.

Rees, who has yet to decide what to do with his winnings, said concerns over the Templeton Foundation's agenda seemed "excessive" to him. He said grants from the foundation had made possible scientific meetings, events and major projects such as the Darwin Correspondence Project at Cambridge, which is putting online more than 6,000 of Darwin's letters.

John Templeton Jnr, president of the Templeton Foundation, said: "The questions Lord Rees raises have an impact far beyond the simple assertion of facts, opening wider vistas than any telescope ever could.

"By peering into the farthest reaches of the galaxies, Martin Rees has opened a window on our very humanity, inviting everyone to wrestle with the most fundamental questions of our nature and existence."

In 2006, the Templeton Foundation funded a study to investigate whether heart bypass patients recovered more quickly if people prayed for them. The study concluded that prayer at best had no effect. In this particular study, patients who knew they were being prayed for fared worse than others.