And then there were two. The cancellation of Fujitsu's contract with the £12.7 billion national upgrade of NHS computers makes it the second key company to cut its losses and quit the beleaguered project in three years.

The latest progress report by the National Audit Office, published this month, concludes that The National Programme for IT (NPfIT) is running up to four years behind schedule in its aim to create of a centralised medical records system for 50 million patients in England.

But from the original four “local service providers” who won contracts for different regions, there are now just two companies — BT and a conglomerate known as Computer Science Corporation Alliance (CSC) — propping up the largest non-military IT project in the world.

Fujitsu's departure follows that of Accenture in 2006, and the withdrawal of another key player amounts to another grim indictment that the project is unachievable on the scale — and politically ambitious deadlines — envisaged by Tony Blair on a Downing Street sofa in 2002.

The NAO has blamed the Government for significantly underestimating the challenges involved, but so far the service providers — themselves “middle men” who rely on sub-contracted companies to provide the software — have paid the price for the delays.

Fujitsu had a contract worth £896 million to supply systems to NHS trusts in the South of England, but has been involved in protracted “contract reset” with the Department of Health since July.

Warning signs were already apparent in February 2007, when Andrew Rollerson, a Fujitsu executive, told an IT conference that the NPfIT “isn't working and isn't going to work”. He added that there was a danger that suppliers would be defeated by the gargantuan size of their “risk-laden” task.

However, the Japanese-owned company didn't fail totally - being able to provide the required systems for digital x-rays and fast broadband networks on time — but was let down by the failure of another company, Cerner, to deploy care records software known as “Millennium” on time.

Under the terms of the contracts, suppliers are paid only when services are proven to have been delivered and working for 45 days. In practice, this meant that Fujitsu was often left waiting for payment more than 12 months after the deployment of systems.

The timetables and products set out in the original contract began to be seen as irrelevant, even obstructive, superseded by changes in the NHS. Fujitsu wanted more money, or a return to the original contract. The Department of Health refused to back down, so it backed out.

When Accenture pulled out of contracts worth £2 billion for the North East and East of England, it was prompted by a 67 per cent decline in its profits. Fujitsu can expect to lose about £340 million by pulling out from the NPfIT. But Accenture retained £110 million of the £173 million it had previously been paid by the NHS, and it remains to be seen how much Fujitsu's decision will cost the taxpayer.

CSC, which was already overseeing the project in the North West and West Midlands, filled the void left by Accenture in 2006, and now BT, responsible for the NPfIT in London, will be favourite to do the same for Fujitsu's territories in the South.

But upgrades seem to have been most successful and timely when NHS trusts have dealt directly with software companies, increasingly buying alternatives to the software that failed to emerge under the NPfIT. This raises questions about the need for the middle men at all.

Meanwhile, the NPfIT, always mired in jargon and consultant-speak, has been mostly viewed with suspicion by doctors, nurses and patients who will actually use and rely on the systems. They will be left even more uncertain and worried by this latest development.

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