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Fujitsu, which is responsible for updating NHS IT systems across the south of England, will now be replaced by another supplier after failing to strike a deal with NHS Connecting for Health.
Its work under the existing contract will continue until a new provider is found.
An NHS CFH spokesperson said it has not been possible to reach an agreement on the core Fujitsu contract that is acceptable to all parties. "The NHS will therefore end the contract early by issuing a termination notice. Work has started immediately on planning the necessary arrangements."
Fujitsu's departure follows the withdrawal of Accenture from NHS National Programme work after it failed to turn a profit on its work.
Prime candidates to take over from Fujitsu are BT and CSC, already heavily involved in the programme.
In-depth analysis of Fujitsu's contract termination >>