A public/private partnership project to develop a €250 million Digital Hub in Dublin's Liberties may be scrapped in favour of a new State-led development proposal.

The Digital Hub Development Agency (DHDA), the body managing the project, said yesterday it was evaluating a "phased self-development" model as an option to proceeding with a stalled tender to find a lead developer for the project.

A tender process begun in 2002 to select a developer to develop seven of the nine acres on the Digital Hub site has proved inconclusive. Negotiations between the board of the Digital Hub with Manor Park Homes, the preferred bidder, have so far failed to reach agreement on a final deal that can be notified to the Government for approval.

The project, which has already received €70 million funding from the Government, is running years behind schedule with work on the main seven-acre site unlikely to start until mid-2006.

Mr Philip Flynn, chief executive of the DHDA, said the agency had to look at all the possible options for developing the Digital Hub.

He said these included a type of "phased self-development model", which would see the agency contract several developers to work on different parts of the Liberties site.

This option may require the DHDA to apply for a relaxation of borrowing restrictions set at €10 million to lead the development, according to Mr Flynn.

He said that no final decision had been made by the board of the Digital Hub on which option to proceed with and notify to the Government for approval. This decision is expected shortly.

A spokesman for Manor Park Homes would not comment on the firm's bid to develop the Digital Hub.

A decision to drop the original public/private partnership proposed for the hub would be an embarrassment for the Government, which already has a chequered history in these projects.

In 2004, the Comptroller and Auditor General studied a pilot scheme where British firm Jarvis was contracted to build five primary schools.