Bournemouth Borough Council is seeking independent advice on its plans for a hotel adjacent to the Bournemouth International Centre (BIC).
However, this provoked the threat of a legal challenge by Bespoke Hotels and Peel Hotels, following which procurement was reopened for the 322-bedroom hotel development. This procurement process has now been discontinued.
A Bournemouth Borough Council spokesman said: "We are commissioning independent advice on the best route to progress this project and will take a report to the council's cabinet for decision when this analysis is complete."
In a report the cabinet concluded that the benefits of discontinuing the procurement process and re-advertising the preferred model to the market as a whole would outweigh the costs and management time that would have to be incurred in defending litigation and announced its intention to run a new procurement process.
The cabinet asserted that it is still "committed to the ongoing project" and said: "options will be brought forward for consideration and decision in due course".
It added that the decisions had not been made due to any concerns about Mill Lane's ability to deliver the contract, but because the opportunity has to date only been offered to a limited group which may not achieve the best possible commercial deal.