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She was a Liverpudlian life model who posed for thousands of artists, including Lucian Freud, who described her as an exotic creature with a deep penetrating mind, and John Lennon who, as an art student in his pre-Beatles days, asked if it would be all right to draw her.

June Furlong befriended many of those artists and, just months before her death last year, she was understood to have donated artworks that she acquired over the years to a public museum in the Wirral.

Now a row has erupted over the legal ownership of her collection. Artists who knew her are outraged that many of the paintings, prints and drawings that she had earmarked for the Williamson Art Gallery & Museum, Birkenhead, were instead sold by Hansons Auctioneers in Staffordshire in December last year.

Artist Charles Thomson spoke of his fury as he had helped to organise her charitable donation: It is absolutely outrageous that June Furlong gave her art collection to a museum and now important work has been sold off The work was [consigned to] auction, even before she had been buried on 8 December. There were 55 works. One lot of five [Frank] Auerbach prints of female nudes raised 26,000 hammer price. The total for the auction exceeded 42,000.

Furlong died in November last year, aged 90. Over six decades, she had posed for artists, going to the studios of Francis Bacon and Auerbach, among others. She had been a longtime model for the Liverpool School of Art, where she knew Lennon, who was fascinated that I knew all the big names in English art, she once recalled. She also modelled in London, at the Slade, Central St Martins College and the Royal College of Art.

But she disliked being described as a nude model, once saying: Nudity has such sleazy connotations It gives completely the wrong impression of the art world I was involved in.

Furlong was a long-term companion of the artist George Wallace Jardine, the surrealist painter who tutored Lennon on occasion, and her donation included many of his pictures.

Thomson said that Furlong had not just signed a gift document, but had written a message, confirming her wishes for the Williamson. On 7 December, he had enclosed that document - whose original is held by the Williamson - in an email to the auctioneer, Charles Hanson, known from his appearances on the BBCs Bargain Hunt, among other programmes.

He wrote: I have spoken to the Williamson who have confirmed that the work entered into your auction this week from June Furlongs house is their property and has been since June this year, when she gifted it to them with the proviso that she could keep in her house during her lifetime such works as she wished. This was effectively a loan from the Williamson to her.

Thomson is calling for legal action to be taken by Wirral Council, which funds the Williamson, either to retrieve the auctioned works or to ensure all proceeds go to the gallery.

But whether that document is legally binding remains to be seen. Furlongs cousin, Roy Corlett, confirmed he was aware of the pictures transfer to Hansons and that he was the next of kin, among other family members.

He said: There isnt an executor at the moment because theres no will I think this matter will be sorted out between two lots of solicitors, those representing Junes estate and those who represent the council.

Asked whether Furlong had signed the gift document, he said: Thats a matter for solicitors to decide.

Colin Simpson, curator of the Williamson and principal museums officer for Wirral council, said: The council and the executors are taking legal advice in relation to the ownership of the collection.

On the Williamsons website, he pays tribute to Furlong as an iconic figure in the Liverpool art scene.

Thomson said: I tried to stop the auction in order to save the work for the Williamson collection, but could not do so. Only Wirral council could have done this and they didnt.

Once the auction was going ahead anyway, I bid successfully for several paintings by Jardine for my own collection, which is scheduled for a charitable art foundation and museum I am planning I would support any action to retrieve for the Williamson all the work from Junes collection sold at the auction or else all the money raised from the sale.

Bob Williams, a retired Liverpool gallery owner who was a contemporary of Furlong, Jardine and Lennon at the Liverpool School, said: The wishes of June Furlong should be carried out for her art collection to be in the Williamson. Sir Nicholas Serota, chairman of Arts Council England, confirmed to the Observer that his team was looking into the questions that [Thomson] has raised.

Hanson declined to comment.

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Freud's muse ignored? Row breaks out over sale of June Furlong's art collection - The Guardian