TALKS are continuing between Banbury-based software firm iSoft and US company Computer Sciences Corp, which is threatening to block iSoft's takeover deal.

Last month iSoft, whose share price crashed last year after it issued a profit warning, told investors it was securing its future by recommending an all-share rescue offer from IBA Health, a much smaller Australian rival.

CSC, which uses iSoft's software for the Government's multimillion pound programme to update NHS computer systems, has blocked the deal under a clause in its contract which gives it the right to ditch iSoft if the business is sold.

ISoft said CSC had given no reason for its decision, which followed months of talks. In a statement to the London Stock Exchange, they said: "CSC has not provided any reasons regarding this position and both iSoft and IBA are now seeking clarification from CSC."

A spokesman for IBA said: "We would like urgently to sit down with CSC and discuss why their position has changed so substantially."

He added IBA was considering legal action. It believes the change of control clause states CSC is not allowed to "unreasonably withhold" consent to the offer.

If iSoft collapses and is taken over by administrators, the NHS programme would face more delays while alternative software suppliers were found. The programme is already two years behind schedule.