There are plans for 17 new operating theatres

The Vanguard Project hit problems when two of three bidders for the deal at Plymouth's Derriford Hospital withdrew.

No private finance initiative (PFI) project with a single bidder has taken place in England before.

Talks are now being held between the health community and the Department of Health over the best way forward.

The project includes a centre with 17 operating theatres and 400 beds for routine surgery and care planned in advance.

Not expanding and improving services is not an option Andy Ibbs, Vanguard director

It will be built under the PFI and owned privately, then effectively leased back to the National Health Service.

Vanguard director Andy Ibbs said: "The Vanguard Project is proceeding and we are committed to getting the best possible outcome.

"As a health community we are dedicated to modernising and expanding services through Vanguard for the local community of Plymouth and the surrounding area.

"Not expanding and improving services is not an option, but the shape of the facilities and exactly how they are provided is still subject to debate."

He added: "We are clearly concerned about the current procurement situation and are therefore putting it on hold and over the next few weeks we will be considering a number of possible options."

Mr Ibbs said they would involve other local NHS organisations to ensure the procurement process delivered the best value for money with the minimum delay.

One of the bidders for the contract dropped out to concentrate its business elsewhere, while the other withdrew due to the lack of a business partner.