Sickly NHS provider iSoft was predicted to make a full recovery - thanks to a takeover bid from Aussie company IBA Health.

But CSC, the main contractor company responsible for getting iSoft products running in the NHS, has objected to the deal.

iSoft and CSC have a memorandum of understanding that gives CSC the right to veto any change in iSoft's ownership which it considers will have an impact on the company's software.

A spokesman for iSoft told the Register: "We received a letter from CSC saying they do not intend to consent to the takeover. But it did not explain why."

IBA business development head Greg King told the FT: "We've shown them our package for regenerating iSoft, we've guaranteed not to disrupt the current program, promised to retain the current management."

He told the paper that the companies had issues to sort out, but they were not "significant barriers".

iSoft shares took a tumble - falling almost 20 per cent to 41.5p in morning trading.

CSC refused to comment on this story, but promised a statement later today. ®