A row over the location of a new critical care hospital in south London has gone back to square one after NHS London persuaded the health secretary to re-open consultation.

A row over the location of a new critical care hospital in south London has gone back to square one after NHS London persuaded the health secretary to re-open consultation.

Its terms of reference are set to be published this week, and it is expected to be completed by the end of December.

Local managers had chosen a site in Sutton for the critical care hospital following a consultation. But the local overview and scrutiny committee, which backed a site at St Helier, referred the matter to Patricia Hewitt. In December last year, Ms Hewitt agreed with the committee and ordered the NHS to go for the St Helier option, citing the need to reduce health inequalities for her decision.

This was despite the findings of a report by London director of public health Sue Atkinson, commissioned by Ms Hewitt, which said 'there is no essential difference between the two sites in terms of their impact on health inequalities'.

But last month, when he was still chief executive of NHS London, NHS chief executive David Nicholson wrote to Ms Hewitt asking for the matter to be returned to the strategic health authority because of planning problems at St Helier.

The letter persuaded Ms Hewitt to backtrack. She has now asked NHS London to carry out a review, focusing in particular on reduction of health inequalities.

Last year, a consortium of managers and clinicians from Merton, Sutton and Surrey working under the banner Better Healthcare Closer to Home (BHCH) recommended the Sutton site, citing potential planning problems at St Helier.

And after Ms Hewitt had overturned their decision, a subsequent review found that the St Helier site - designated 'metropolitan open land' - would be affected by 'severe difficulties' in relation to planning permission and restrictive covenants which would prohibit the intended development.

External consultants were asked to look at the issues involved in building on metropolitan open land opposite the hospital, on the hospital's car park and on the hospital site itself. They found the land is subject to restrictions, that building on the car park would result in tall buildings unlikely to receive planning permission, and that building on the hospital site would be difficult.

The row has been peppered with allegations that decisions were made on political grounds. Conservative MP for Epsom and Ewell Chris Grayling accused Ms Hewitt of 'gerrymandering' after she chose a Labour constituency for the site of the new hospital in preference to a Liberal Democrat one.

A BHCH spokesperson emphasised that the new consultation would not involve the public. Local stakeholders, including MPs, NHS and social care organisations and the local patient forum, would be asked for input.

BHCH programme director Robert Barr welcomed the review. He said: 'This is an appropriate time to perform a stock take on the programme.'

Labour MP for Mitcham and Morden Siobhain McDonagh had hoped that St Helier, which is in her constituency, would be chosen for the critical care hospital.

She said: 'We are sure the review will show what everyone knows: that the area around St Helier has the greatest health and social needs in the trust's catchment.'

A Department of Health spokeswoman said: 'Following the decision by the secretary of state it transpired that there were difficulties regarding planning and finances, which were more significant than originally thought.'