The Secretary of State for Health will this week rule on the proposed development at St Bartholomew's and the Royal London Hospitals, the biggest private finance initiative (PFI) ever carried out by the NHS.

But there are signs that Ms Hewitt has caved in to pressure from the Treasury, which fears the NHS will struggle to meet the repayments as PFI projects grow ever larger. She is thought to be preparing to postpone half the work due to be carried out simultaneously at both Bart's and the Royal London Hospital in Whitechapel.

Doctors say that delay will throw the whole scheme into confusion and could lead to the redevelopment of only one of the hospitals. The likely casualty would be Bart's, whose cancer and cardiac teams are among the best in the world.

Clinical director of cancer services at Bart's, Dr Chris Gallagher, said: "The history of the health service is that, whatever the assurances at the time, so-called 'phase two' projects very rarely materialise. All the elements of the modernisation rely on one another; any attempt to unravel them would be disastrous."

Another senior doctor said: "To break up these teams, just as the world is coming to East London for the Olympics, would send out a terrible signal."

Ministry officials do not deny this is the crunch week for Bart's. "Patricia Hewitt needs to convince herself totally that the business case for this project stacks up if she's going to take on the Treasury," one said.