Insiders say IBM is the only supplier left in the race to build the pilot for the government's eBorders scheme.

The deal, called Semaphore and estimated to be worth around £10m, could be signed as early as the end of this week, Computing has learned.

The eBorders scheme includes plans for a system linking government agencies with travel operators and overseas transport terminals, to log, cross-check and authorise every traveller coming into the UK. Those rejected by the system will not be given permission to travel.

The winner of the Semaphore deal will build a proof-of-solution pilot system and help the government run the procurement for the main eBorders deal.

Sources close to the Semaphore negotiations say there is no official down-selection process as part of the procurement, but at this stage only IBM is still in discussion with the government. The pilot is scheduled to be up and running by the end of the year.

The eBorders procurement is due to start in early 2005 and should be signed by the end of the year. According to the current provisional timetable, the system could be live by 2008.

eBorders is being run by the Home Office but will be closely linked to the Foreign Office's iVisa scheme, the Immigration and Nationality Directorate, the intelligence agencies, HM Customs & Excise, the Passport Service's biometric passport programme, the Department of Work and Pensions, and the ID cards scheme.

The Home Office was not available for comment.