The fate of troubled NHS software supplier iSoft could be decided by auction after it deferred making a decision on whether to accept an improved offer from Australian rival IBA Health.

IBA Health had its initial bid of £142m accepted by iSoft shareholders, but directors advised against the deal after German e-health company CompuGroup entered the fray with a surprise £160m bid.

The CompuGroup bid also received the support of Computer Sciences Corporation (CSC) because the firm planned to sell on the part of iSoft’s business working on the £12bn National Programme for NHS IT (NPfIT).

CSC delivers 60 per cent of the NPfIT and iSoft’s Lorenzo software is critical to the programme. But it has been delayed several times.

IBA Health has since upped its bid to £166.3m and CompuGroup is considering whether it will attempt to beat the revised offer.

In a statement, iSoft said it will defer its shareholder meeting to consider both offers.

‘At this point in time neither (company) has declared its offer final and, as such, either offer may be increased or revised,’ it said. ‘In order to provide an orderly framework for the resolution of this competitive situation, iSoft is discussing with the Panel on Takeovers and Mergers the terms of an auction procedure.’