Ministers scrapped plans to approve a £715m national football stadium at Wembley at less than 24 hours' notice.
Tessa Jowell, the Secretary of State for Culture, Media and Sport, had been preparing to make a Commons statement on Monday, announcing that years of uncertainty over the project were at an end.
But by Sunday evening her department and the Football Association were in a spin after questions were raised over the way contracts had been awarded to build the stadium.
After emergency talks over three days, Ms Jowell was forced to appear before MPs to tell them of "a number of serious concerns" over the Wembley scheme. She said there were worries that the developer, Wembley National Stadium Ltd (WNSL), had "not adhered to best procurement practices of corporate government arrangements in relation to the new Wembley stadium". Ms Jowell stressed that "no evidence whatever had been found of any criminality or impropriety at any stage of the process".
The concerns are understood to centre on the award by WNSL of the contract to build the stadium to the Australian company Multiplex.
Ms Jowell said an outside company would make an independent value-for-money assessment of the contracts awarded. Documents setting out details of the deal will be passed to the National Audit Office for a possible investigation. She said she would be seeking confirmation that financial support for the project was "adequate and fully committed".
The minister told MPs: "I have said to the FA and WNSL that should they continue with the Multiplex contract they must set in train an independent assessment of the value for money which it represents and ensure that corporate governance and procurement arrangements hereafter represent best practice before the Government will proceed with any further support to the project, financial, moral or otherwise."
She made clear that any future public money for the project, which would be on top of the £120m of lottery cash already handed over, would depend on WNSL meeting the latest set of guarantees. She also said a timescale for resolving the problems had to be set out.
A Whitehall official later said: "We want to be certain that there are no stains on this project. There is a considerable amount of public money involved. If you are giving it out, the process has got to be squeaky-clean."
Patrick Carter, the businessman brought in by the Government to examine the rival proposals for a national stadium, had reported that the stadium project had been dogged by uncertainties over costs. It had lost credibility with banks, builders, the media and the public.
In an apparent criticism of the WNSL management, Mr Carter said: "The stadium's project vehicle needs a strong and credible board and management with the requisite experience to make the project succeed."
He added: "Any solution requires strong, unified and enduring commitment from the FA, Sport England [the body handing out lottery money to sport] and the Government. Without the certainty of this, the project will fail."
The announcement marks another unforeseen, and unwelcome, twist in the seven-year saga of plans to develop a new national stadium.
By 1998 the cost of the new Wembley, to include a hotel, offices and banqueting facilities, had soared to a projected £660m. Plans to include a running track were scrapped by the Government two years ago, and shortly before the election the whole project was put on hold after the FA approached ministers for more cash.
Tim Yeo, the shadow Culture Secretary, said: "This announcement follows a catalogue of sporting disasters caused by bungling ministers."
Last night Mr Carter said the balance had tipped in Wembley's favour because the capital could attract the expensive corporate backers essential for balancing the stadium's books. He said: "If you have a football stadium say with 90,000 people in it, 75,000 of those people are general admission, so you have ordinary people paying, you and I can go buy a ticket.
"That pays for the running of the stadium ... but if you want to finance it and borrow any money, you have to rely on the money the premium seat people pay, the higher payers. And of course it follows from that, where do you find the most high-paying people? And the answer is in London."
Peter Bradley, Labour MP for The Wrekin, whose Commons motion calling for the stadium to be developed in the West Midlands was backed by 100 MPs, said: "There is a good chance that the Wembley deal will fall through and we will end up with Birmingham anyway. But if it is built at Wembley it will surely be the FA's stadium and not a truly national stadium."
He said: "Almost everyone involved in football, politicians from every region and party and, above all, the supporters want to see the stadium in the West Midlands."