The £200 million sale of iSoft could be in jeopardy after talks with the preferred buyer were put on hold, potentially forcing the beleaguered IT company to consider a rights issue, The Times has learnt.

It is understood that American drugs distribution company McKesson was front-runner to buy iSoft but in recent weeks talks with Computer Sciences Corp (CSC), iSoft’s key NHS contractor, have broken down over certain contract conditions that McKesson wants included as part of any deal.

“McKesson would be the best buyer because they’re a cash bidder, but they would have to be persuaded to drop all their current demands,” a source close to the sale said. “Until they do that, they’ve been told that they’re not going forward.”

Two other bidders, General Atlantic Partners, a US private equity firm, and IBA Health, a listed Australian healthcare firm, also made it on to the shortlist. But talks with General Atlantic are also on hold because the US firm is proposing a debt for equity swap on terms not acceptable to CSC, while IBA would need a large rights issue, which makes it unlikely to succeed, sources said.

Shares in the IT group lost more than 90 per cent in 2006 after a string of profit warnings and the discovery of accounting irregularities, which led iSoft to restate its accounts and wipe out most of its profits. The scandal is the subject of a continuing investigation by the Financial Services Authority.

ISoft was given a lifeline by its banks but the interest on the loans is such that it needs to find new equity fast, or face another cash crunch.

John Weston, iSoft chairman and acting chief executive, said in October that a share issue to pay down its huge debt pile was still an option if a suitable buyer could not be found.

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