Stewart has enjoyed a resurgence with his albums of jazz standards

The 60-year-old said he would "defend his honour" against entertainment company Harrah's, who claim that he breached their contract.

Mr Stewart called off the show while recovering from thyroid cancer surgery.

Harrah's said they had been willing to reschedule the concert if the money was returned, but this offer was declined.

Two tumours

Mr Stewart's lawyer Louis 'Skip' Miller told reporters outside the courthouse that Mr Stewart had been prepared to play two rescheduled shows for the price of one, saying he was "willing and able" to perform following his recovery from surgery.

"It took him 10 to 12 months to get his voice back," added Mr Miller, who explained that two tumours - one of them malignant - had been removed from the singer's thyroid during surgery in May 2000.

Gary Morris, lawyer for the Rio hotel-casino in Las Vegas where Mr Stewart had been booked to perform, said: "We don't hold his illness against him.

Stewart had two tumours removed from his thyroid in May 2000

"We only wish to hold him to his contract which says if he is ill or incapacitated or can't perform, he will return the money."

Harrah's, who own the Rio hotel-casino, are seeking the return of the money plus interest and legal fees.

The singer and Harrah's chairman Gary Loveman are both expected to be called as witnesses at the trial.

In November, Mr Stewart was ordered by a Los Angeles court to repay an Oklahoma company after a Latin American tour was cancelled in 2002.