BT has lost the contract to run the Government's flagship end-user portal, UK Online.
Following a month's extension to continue negotiations for contract renewal, talks have finally broken down.
The e-envoy's office told vnunet.com that it was now pursuing other options.
It said: "Negotiations for the renewal of the original contract with BT have been terminated. The office of the e-envoy is currently evaluating numerous contractual options."
The e-envoy's office is refusing to say why BT lost the contract, but added that the portal's current operation would not be affected by the collapse of talks with BT.
BT expressed surprise at the e-envoy office's comment, but failed to provide further comment at time of publication.
Launched in February 2001, UK Online had generated a million hits a week by the end of July, when the original 12-month contract with BT expired.
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