Work on a multimillion pound hospital has been delayed because of a shortage of cash.

The new £8 million Arun Community Hospital in Littlehampton is due to open next year, but building work has been put on hold until the autumn.

Preparation work had already begun, with the former Littlehampton Hospital on the same site in Fitzalan Road demolished at the end of last year to make way for the new development.

Local services are being provided at Zachary Merton Hospital in Rustington while the work is being done.

The hospital is being paid for through a Government private finance deal, with Adur, Arun and Worthing Primary Care Trust (PCT) paying an extra £752,000 a year to cover the cost of using the building.

It will also pay out about £600,000 to equip the new hospital.

Surrey and Sussex Strategic Health Authority (SHA) was due to give the go-ahead to a business plan this month so the deal could be tied up by the end of this financial year.

However, the money pressures faced by the NHS across Sussex have led to concerns about whether the extra cash can be found.

The Argus reported last month that the cash-strapped SHA was borrowing almost £100 million to pay wages, bills and suppliers.

It is working to support hospital trusts in Sussex that are facing debts of more than £80 million.

This includes Brighton and Sussex University Hospitals NHS Trust, which has an expected overspend of more than £12 million and is being given an extra £8.5 million to help it.

Royal West Sussex NHS Trust, which runs St Richard's Hospital in Chichester, is getting an extra £14.6 million and Worthing and Southlands Hospital NHS Trust is to receiv £4.7 million.

Surrey and Sussex Healthcare NHS Trust, which runs Crawley Hospital and East Surrey Hospital in Redhill and has one of the highest debts in England, has already been given an extra £40 million and will be getting a further £20 million.

Adur, Arun and Worthing PCT chief executive Steve Phoenix said: "I can understand the reasons for the SHA's position.

"Although our PCT isn't in debt, the wider NHS is in a serious financial position, as are our local partners at Worthing and Southlands.

"If we are to tackle this very difficult situation, we must review all plans and all developments."

Project director Brian Hughes said everyone at the PCT was disappointed with the delay.

He said: "The good news is that all the detailed planning has been completed and once we're given the green light, the scheme will be ready to go."

In the meantime, Zachary Merton will continue to provide services as usual.

The new hospital will have two 20-bed wards and treatment rooms offering chiropody, speech and language therapy and physiotherapy.

It will be able to provide rehabilitation services for patients ready to leave a main hospital but not quite ready to go home and can also carry out X-rays and ultrasounds.

Social workers and care assistants will also be based in the hospital.

A spokesman for the Patient Action Group in Sussex said the organisation was disappointed.

He said: "We know the financial pressures the NHS is facing in this area but this type of development is vital.

"It is trying to help the financial crisis by providing more facilities for people in their local community.