The Defence Stores Management System (DSMS) is designed to eventually replace three existing stores management systems for the army, navy and air force. Officials confirmed that development work to build the joined-up system had been suspended amid funding concerns.
An MoD spokesman said, "It is fair to say that spending in the department is taut."
He refused, however, to confirm that the project will be shelved. "It will be at least a couple of months before we decide where we are going to go," he added.
The MoD's Defence Logistics Organisation had selected IBM Global Services to lead a team of systems integrators to build DSMS. Work on the project began in 2000.
The first of the ministry's systems to be replaced by DSMS was scheduled to be the air force's Stores Central Computer System (SCCS), although officials confirm that the existing system will now continue to be used.
The MoD spokesman said, "The fact that the SCCS is performing better than anticipated means that we are able to suspend development work on DSMS."
Officials also claim that the decision will not affect the much-publicised £45m Defence Electronics Commerce Service (Decs) e-procurement system, which was launched in August 2000. The spokesperson said, "Decs will not be affected by this. There is no talk of it being suspended."
Decs is the MoD's single electronic gateway to its trading partners and is designed to revolutionise the way that the department does business. The e-procurement system aims to provide a wide range of services, including automatic transactions and online product catalogues.
Nonetheless, the lack of a single, integrated system for managing stores across the armed forces raises serious questions about the ministry's ability to meet government modernisation targets.
The Defence Logistics Organisation, however, is adamant that suspension of development work on DSMS will not affect the UK's armed forces.
A spokesman said, "We will ensure that, within our resources, we will give the best possible support to our defence forces."