TAXPAYERS face mounting legal costs after a further twist in a protracted court wrangle over a NHS computer contract worth more than £110 million.

Communications giant BT will be pursuing damages - believed to be £20 million - against the public body after deciding not to appeal a judge's decision that found the NHS could proceed with the deal from a rival bidder.

Lord Malcolm lifted the suspension regarding the awarding of the contract by NHS National Services Scotland (NSS) following a hearing last month at the Court of Session.

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But in a new development, BT last night indicated it would be pursuing damages, arguing the judge had found in its favour that there had been flaws in the tendering process.

In a statement the company said: "BT has chosen not to appeal Lord Malcolm's decision to lift the suspension.

"We are pleased that Lord Malcolm, following the hearing in January, found in our favour with respect to the primary argument and agreed that the procurement regulations had been breached by NHS NSS.

"Though BT's primary aim was always to seek a re-run of the procurement process, the case will now proceed as a damages claim, Lord Malcolm having found damages to be an appropriate remedy for BT to seek for that breach."

The company said its tender offered "excellent value and ­minimal risk to Scottish taxpayers" and believed it was unclear "whether the most economically advantageous tender" would be awarded.

A BT spokesman last night refused to comment on the level of damages it would be pursuing because of the ongoing action, but last month it was reported that if it did not win the chance to have the tendering process re-run it would seek recompense of £20m.

The dispute broke out at the end of last year as the NHS was preparing to award the multimillion pound contract for the provision of computer network services to a different company, ending the contract BT had with the service.

NHS NSS, which led negotiations, has estimated the new deal would save the public purse around £300,000 a month.

But there is concern any major delay will prove expensive to the public purse, potentially jeopardising about £4m in savings over a 12-month period.

The new six-year contract is intended to bring the NHS, councils and other public sector organisations onto the same information sharing network, Scottish Wide Area Network (Swan). This, it is expected, will make it easier for information to be shared securely and will cut costs arising from the numerous contracts with different firms.

The move comes as the Scottish Government is integrating the NHS and council-run social care services. The Scottish NHS and six councils are involved in the first phase of Swan, but it is hoped this will expand significantly.

The contract is due to start in April - although NSS suggests the legal delay has created a backlog.

A spokesman for NHS National Services Scotland was last night unavailable to comment on the damages action, but had earlier welcomed the decision by BT not to appeal Lord Malcolm's ruling. He said: "We are pleased we are now able to proceed with the contract award and get moving with the implementation of Swan.

"This is great news for taxpayers and anyone who uses public services, whether in schools, councils, hospitals or elsewhere. The Swan project is a major step forward in Scottish public sector infrastructure which will create savings and deliver an excellent service."

Three companies were involved in the final selection stage of the bidding process: Cable & Wireless together with Virgin Media Business, a joint Capita-Updata Infrastructure team and BT.