The Royal Hospitals trust is lobbying ministers to back their decision to 'save' St Bartholomew's Hospital with extra cash.
The trust planned to transfer Bart's services to a new 1,200-bed hospital at Whitechapel until health secretary Frank Dobson accepted the recommendations of a strategic review of London's health services last week.
The review, led by former president of the Royal College of Physicians Sir Leslie Turnberg, recommended scaling back the Royal London Hospital development and preserving Bart's as a cardiac and cancer centre.
The trust claims running services on two sites will cost pounds17m-pounds25m more than moving them all to Whitechapel.
Andrew Wright, project director for capital projects, said extra costs would be incurred by maintaining old buildings at Bart's and duplicating services.
He said it would be impossible to run a major teaching hospital with accident and emergency facilities at Whitechapel without cardiac back- up - or to run a tertiary centre at Bart's without diagnostic and surgical services.
'We welcome the government's commitment to a new hospital in east London,' said Mr Wright. 'We can make this work if Mr Dobson puts his money where this decision says it must go.'
Shadow health secretary John Maples claimed the decision had been made to 'save face'. The five-year campaign to save Bart's won high-profile backing before the election from prime minister Tony Blair, who said Bart's services should be 'preserved forever'.
But health minister Alan Milburn has said that private finance initiative plans for the new Royal London Hospital were 'in no way, shape or form realisable' and the decision offered the chance of a much more feasible scheme.
Mr Wright denied PFI plans had stalled, saying detailed discussions would have resulted in a 'deliverable scheme'.
The Turnberg report says a single site appears to have 'persuasive advantages' over a dual site, but that building such a large hospital at Whitechapel would be 'complicated, time consuming and expensive'.
It says a dual site solution would be better than a 'worst outcome' in which the new hospital was scaled back while other facilities closed. It also concludes it would be 'more expensive'.
Christine Hancock, general secretary of the Royal College of Nursing, echoed widespread support among lobby groups for the decision to reprieve Bart's by saying the hospital had 'a special place in Londoners' hearts'.
But campaigners said they would keep fighting to get its A&E department reopened.
Rabbi Julia Neuberger, chief executive of the King's Fund, welcomed the Turnberg report's conclusion that there was no future for Bart's as a general hospital: 'There can be no justification for keeping general hospital services at Bart's if that would take much-needed health resources away from the people of north and east London.'
See News Focus, page 13