The £12bn plan to centralise the military's training programme has suffered another setback following the withdrawal of Land Securities from the consortium picked to take forward the project at the beginning of last year.

The Defence Training Review (DTR), the UK's largest private finance initiative, will centralise all non-military technical training for army, navy and air force personnel in one academy at St Athan, Vale of Glamorgan.

The government awarded the contract to build and run the new defence academy to the Metrix consortium, a joint venture between Qinetiq and Land Securities' outsourcing arm, Trillium.

Yesterday, Qinetiq told the government that Land Securities had withdrawn from the process. Land Securities has spent about £20m so far and is reluctant to keep funding the project in the face of significantly increased costs over the next 18 months.

Qinetiq, the defence research group that is the lead contractor on the programme, is already in talks with alternative partners, although the move comes at a difficult time for the property market. There may also be reluctance to take on additional short-term costs just as property and construction companies struggle with a sharp fall in asset values over the past year.

The news is the latest blow to the controversial programme. There have already been concerns about the viability of the 25-year project after it emerged that costs had risen by nearly 10 per cent since the beginning of last year.

A Land Securities spokesman said its Trillium arm was withdrawing 'in the light of the significantly increased bid costs, carried at risk by the bidders, required as the project moves into detailed design work'.

Financial Times