The Conservative Party is considering plans for a £100m cap on government IT contracts to prevent costly and problematic schemes such as the £12.7bn NHS National Programme for IT.

Major long-term centralised contracts could be split and offered to smaller firms using open source software, says the report by Dr Mark Thompson of the Judge Business School at Cambridge University.

The Tories want to hear feedback from the public and the IT industry on the proposals, which will appear on its web site, before considering whether to make them official policy or not.

"These proposals are not just about saving money - they're about modernising government, making the public sector more innovative and improving public services," shadow chancellor George Osborne told the BBC.

The Conservatives have made it policy to oppose most major government IT schemes, including the ContactPoint children's database, the National Identity Scheme and the NHS National Programme for IT.

The news comes on a bad day for the NHS programme, as the Commons Public Accounts Committee announced that the scheme should be decentralised if it is still failing to deliver in six months' time.

The report says the £600m a year could be saved by the Tory proposals.