NHS managers are still footing the bill for a privately-run mobile eye unit which has withdrawn its service from south Oxfordshire due to a lack of patients.

The cataract operation clinic, run by South African firm Netcare, no longer makes regular visits to Wantage, even though South West Oxfordshire Primary Care Trust is still paying part of the £2m four-year contract forced on it by Government ministers.

The revelation comes as county health services brace themselves for a raft of measures to reduce an estimated £82m overspend, including 600 axed posts at the Oxford Radcliffe Hospitals NHS Trust.

Former PCT board members and Oxford West and Abingdon MP Dr Evan Harris, who campaigned against the opthalmology unit, claim the withdrawal proves the project was an expensive "white elephant".

The Government announced in 2003 that the mobile unit would travel around the UK to reduce a backlog of patients waiting longer than three months for cataract operations.

South West Oxfordshire PCT board members turned down plans to sign a £2m contract for Netcare to visit its area, fearing it would not be used and would impact on Oxford Eye Hospital, where there were few delays.

Chairman Martin Avis later resigned when the board was forced to reconsider its decision, on the understanding that Thames Valley Health Authority would underwrite the contract if patients failed to use the service.

Speaking about Netcare's withdrawal from Wantage, he said: "There was a clear agreement that the PCT would not be liable for any shortfall. It was absolutely not to be paid by the PCTs if patients did not use it."

The eye clinic was contracted to do 400 operations in Wantage every year, at a annual cost of about £500,000.

Last year, only 160 were done. The 240 excess procedures were sold to other health authorities at a discounted rate, leaving SW Oxfordshire PCT with a wasted £150,000 bill. If the PCT fails to sell Netcare's next two years' operations to other health authorities, it will incur further costs of £1m.

A SW Oxfordshire PCT spokesman confirmed the mobile unit now bypassed Wantage, although they still carried some of the cost.

It still visited Bicester, as part of a contract with Cherwell Vale PCT, but patient numbers were boosted by transporting people in from Milton Keynes and High Wycombe - whose own PCTs paid for the treatment.

MP Dr Harris said: "This is yet more evidence that this was a preposterous white elephant imposed by Government on Oxfordshire."

A Thames Valley Health Authority spokesman said: "We had been working with the Department of Health to underwrite the contract but that money wasn't forthcoming. The PCT is aware that it's our expectation they will bear the cost."

No-one from Netcare was available to comment.