NHS providers could struggle to fill the gap left by the collapse of a £257m diagnostics contract.

Primary care trusts are to be told to find extra capacity after the deal with Atos Healthcare to provide diagnostic services in the North West and South West was terminated by ministers.

The strategic health authorities in both regions have now been charged with making sure PCTs commission the additional capacity to hit the 18-week waiting-time target.

An NHS North West spokesperson said services would be 'unaffected' and it 'still remains in a position to meet its waiting-times targets'.

But PCTs in the North West have warned that a surge in demand could mean there will not be enough NHS capacity for it to pick up the pieces of the deal.

Mike Burrows, Salford PCT chief executive and chair of the Association of Greater Manchester PCTs, said if that were the case, the independent sector would be likely to benefit from the deal.

He told HSJ: 'If all the PCTs are now shopping around for that additional capacity, there could be a crunch point in terms of the NHS market's ability to deliver it.'

It would now be 'a lot of hard work and effort' to recommission the work, part of the wave two independent sector treatment centre programme, he said.

The DoH said the Atos deal - already delayed since March - had been terminated as the company was 'not in a position to meet the contractual conditions and establish services to the timescales agreed'.

Mr Burrows said he had been expecting the contract to be started again. 'We'd not had an inkling that the issues were not being addressed.'

Making the announcement last week, health secretary Alan Johnson signalled that the NHS would get tough with independent providers where necessary. While the NHS 'doesn't have a monopoly on public service, neither does the independent sector have a monopoly on efficiency', he said.

He also announced the go-ahead for a wave two Capio scheme for Cumbria and Lancashire to provide 11,000 procedures a year in general surgery and orthopaedics.

The Atos contract was delayed after other work done by the company in the North West led to seven MRI and ultrasound patients being recalled.

A statement from Atos Healthcare said: 'We are in the process of engaging in discussions with the Department of Health to agree the final termination details of the contract.'