He was speaking at a dinner held to honour the top five 2011 Linux Foundation gurus, including the ultimate Linux.com guru, the member of the site who accumulated the most contribution and participation points over the last year.
The Foundation is a non-profit dedicated to accelerating the growth of Linux.
Shortly after he made the announcement, Torvalds was honoured by Foundation head Jim Zemlin for making the most meaningless contribution to Linux.
In a confidential statement, which was leaked to iTWire by GNOME desktop co-founder Miguel de Icaza, Torvalds said his move to change the licence for the kernel from the GPLv2 had been driven by recent events, including Google's bid to use kernel headers without infringing copyright.
"There are a host of corporations out there, all of them desperately trying to take advantage of the good code we have created," Torvalds said, referring to the kernel team. "And they are all hampered by the licence under which we have released the kernel."
He said a secret summit of kernel developers, held in the Honduran capital Tegucigalpa, had voted unanimously to change the licence from the GPLv2 to the BSD licence which meant that anyone could use code from the kernel in proprietary software and lock it away from public view forever.
Asked for a reaction, Microsoft chief executive Steve Ballmer said he would have to closely examine the statements attributed to Torvalds. "This Linux thing was like a cancer all these years and it is difficult to see it metamorphosing overnight into something that might save our company," he said.
Oracle head Larry Ellison declined an offer to comment. However, sounds of glee could be heard over the telephone before he replaced the receiver.
Google chief executive Larry Page, who is new to the role, said: "Gee, we never do any evil so it doesn't make any difference to us."
Novell chief executive Ron Hovsepian hailed the announcement as the "dawning of a new morning."
The only note of disapproval came from Free Software Foundation chief Richard Matthew Stallman. "This Linux Foundation and other bodies tasked with promoting GNU/Linux are always indulging in publicity stunts. A few years back, some organisation recruited Paris Hilton in a bid to promote the kernel. This is just another cunning stunt," Stallman said.