The former Scottish Tory leader said the proposals were “the opposite of levelling up”, referring to the UK Government’s bid to boost opportunities across the country.
It came as senior Tory MP Julian Knight questioned whether the move was revenge for “biased” news coverage of issues such as Brexit.
UK Culture Secretary Nadine Dorries insisted “government ownership is holding Channel 4 back from competing against streaming giants like Netflix and Amazon”.
She said: "A change of ownership will give Channel 4 the tools and freedom to flourish and thrive as a public service broadcaster long into the future."
Channel 4 was set up under Margaret Thatcher's Conservative government in 1982 and is funded by advertising but publicly owned.
Ms Dorries insisted the profit from any sale would be reinvested into “levelling up the creative sector” in priority parts of the country.
But the plans have sparked a huge backlash from opposition politicians, industry figures and some prominent Conservatives.
Lady Davidson, who now sits as a peer in the House of Lords, wrote on Twitter: “Channel 4 is publicly owned, not publicly funded. It doesn't cost the taxpayer a penny.
"It also, by charter, commissions content but doesn't make/own its own. It's one of the reasons we have such a thriving indy sector in places like Glasgow.”
Jeremy Hunt, the former culture secretary, told Sky News: “I’m not in favour of it because I think that as it stands, Channel 4 provides competition to the BBC on what’s called public service broadcasting — the kinds of programmes that are not commercially viable — and I think it’d be a shame to lose that.”
Damian Green, who as first secretary of state was effectively Theresa May’s deputy, criticised the move as “unconservative”.
He said: “The sale of Channel 4 is politicians and civil servants thinking they know more about how to run a business than the people who run it. Very unconservative. Mrs Thatcher, who created it, never made that mistake.”
Elsewhere, Tom Tugendhat, the Tory chair of the foreign affairs committee, said: “Given the success Channel 4 has been in promoting independent production around the UK, I remain to be convinced this is going to achieve the aim the government has set out. I’ll be listening but I’m pretty doubtful.”
Mr Knight, chair of Westminster’s Digital, Culture, Media and Sport Committee, said it was “certainly true that Channel 4 will have greater freedom to compete once privatised and if managed well it should be able to continue to innovate and crucially appeal to young audiences”.
He said: “However, this is a big risk. The question has to be, do you think a restricted but brilliant small state broadcaster will part compete with the likes of Apple and Amazon or does it need to be able to borrow and grow in a way only privatisation can unlock?”
Writing on Twitter, the MP added: “Now, elephant in the room time - is this being done for revenge for Channel 4’s biased coverage of the likes of Brexit and personal attacks on the PM? The timing of the announcement 7pm, coinciding with Channel 4 News, was very telling…
"Undoubtedly, across much of the party - there is a feeling of payback time and the word privatisation tickles the ivories of many. The money is irrelevant - equivalent to four days national debt interest - so it must be used to support skills in creative sectors.”
The sale plans are expected to be set out in a White Paper later this month and will be included in a new Media Bill for spring 2023.
Line Of Duty creator Jed Mercurio warned the sale of Channel 4 would “inflict huge damage on homegrown creative companies, all to silence a critical news outlet”.
SNP Culture Secretary Angus Robertson said the “unnecessary and ill-conceived plan strikes a blow at the heart of public sector broadcasting at a time when it has shown beyond measure its value during the pandemic”.
He said: “This decision has been widely opposed in the media sector as well as in the vast majority of submissions to the UK Government’s own consultation.
"Critics have pointed out that privatisation will dilute Channel 4’s focus on creativity and public benefit substituting this for a focus on commercial shareholders.
"It is not the way to secure Channel 4’s continued success and contribution to the UK’s creative industries.
“In particular, this will be disappointing news to the independent production sector which has flourished with Channel 4’s help including £200 million for Scottish-based productions and support for 400 jobs since 2007.”
Labour’s shadow culture secretary Lucy Powell said privatising Channel 4 “doesn’t make any sense”.
She told BBC Radio 4’s Today programme: “I think it will cause a great deal of damage to jobs and opportunities in the creative industries, especially in Leeds and Bristol, and Manchester, and outside of London.
“I fear that … rather than competing with some of the big US streaming giants, it is more likely to be bought by one of them.
“That will take money out of the UK economy, out of the creative industries and the independent sector that has so thrived under Channel 4.”
Scottish Tory culture spokeswoman Sharon Dowey said: “We will look at the detail when the full plans are published and expect proper safeguards to be included.
"If this deal raises considerable sums that can be redirected towards independent productions and levelling up projects with the creative industries, we can see there may be potential benefits along with the opportunities for the channel to raise capital going forward to grow the business.”
Channel 4 has said it is “disappointed” at the government’s decision to proceed with plans to privatise the broadcaster without “formally recognising the significant public interest concerns which have been raised”.