Rod Stewart underwent throat surgery in May 2000

Mr Stewart, 60, called off the December 2000 show while recovering from thyroid cancer surgery.

Before taking the witness stand in court in Las Vegas, Gary Loveman, chairman of Harrah's Entertainment, said Mr Stewart should return the fee.

Mr Stewart - who said he will "defend his honour" - may testify this week.

Honour

Harrah is seeking the return of the advance paid to Mr Stewart for the show, plus interest and legal fees.

Mr Loveman said: "Ultimately, we're just here to get our money back.

"We don't wish Mr Stewart any ill will. He was paid a lot of money to do something he did not do. It's merely a contractual matter."

Mr Stewart's lawyer, Louis "Skip" Miller, said his client could take the witness stand as early as Wednesday.

Outside court last week, Mr Stewart said he was defending his honour in the breach of contract suit filed in 2001 by the Rio hotel-casino in Las Vegas, which is owned by Harrah's.

Mr Stewart's lawyer has said the show was cancelled because of the thyroid cancer surgery he underwent in May 2000, and that offers to play a rescheduled date had been spurned.

But Mr Loveman testified that no make-up date could provide the revenues the casino expected to generate from the December 2000 show.

He said the contract was "quite clear", stating "in plain English" that "in the event Mr Stewart didn't perform, he would simply return the money".