The Identity and Passport Service (IPS) says it has cancelled its plan to implement a next-generation electronic passport application system.

It has calculated that the project's costs total £10.8 million since its inception in 2005.

The IPS says costs were retained for certain aspects of the hardware and software which are suitable for re-use in its computer network.

It states in its annual report the decision was made to carry out a more limited upgrade of its existing passport application system "after considering many commercial and technical factors".

A particular consideration was the fact that the contract to support its operational systems will be tendered from October next year and any transitional arrangements "would have been likely to increase costs".

Meanwhile, it was recently reported the Department for Work and Pensions has launched a competition for its IT contracts.

The ITPro website said the contracts for the department's IT services are thought to be worth a total value of £3 billion.

A recent Connect survey found that the two major concerns about outsourcing services like IT support were 'loss of control' (56 per cent) and 'budget over-runs' (43 per cent)