A South Central hospital trust has withdrawn its application for foundation status.

Portsmouth Hospitals trust, which in November reported an in-year deficit of£976,000 compared with a planned£1.1m surplus, said Monitor and NHS South Central agreed "now is not the right time for us to proceed with the application".

A statement said: "The global financial situation has led to an atmosphere of uncertainty and this has left our local health economy in a difficult position."

It continued: "The trust is working with our primary care trust commissioners to continue to plan future healthcare services in our local area under these difficult circumstances and in this volatile financial climate."

Chief executive Ursula Ward said: "We are committed to becoming a foundation trust so that we gain longer term benefits as soon as is appropriate."

The trust said its immediate focus would be opening a newly built Queen Alexandra Hospital in the summer.