The government has cancelled a lead firm on the e-borders contract over delays, Immigration Minister Damien Green said.
The company, american 'Raytheon Systems Limited' had been "extremely disappointing" he said, whilst the e-borders programme itself would continue, Damien added.
Raytheon Systems Limited meanwhile, said it was "disappointed" by the decision of the Home Office.
E-borders - announced in 2007 - was a £750 million contract given to Raytheon and a number of other companies to protect immigration policy and help improve efficiencies for everyday flyers.
Raytheon Systems, a lead contractor on the project had failed to deliver critical parts of the programme - "Whilst some elements of the programme have been delivered, they have not been delivered on time." added Damian.
Another contractor on the programme, UK-based Serco said that it had not been affected by the decision..
"The announcement does not refer to Serco and we have received no notification of any kind regarding our contract or change in our status as a key provider of the programme." it said, adding it had carried out major elements of the e-borders project well as a subcontractor to Raytheon.
"We will seek to deliver, in whatever capacity is required, the enhanced capabilities required by the UK Border Agency for this key element of robust border controls in support of the national counter terrorism strategy." they said.
Raytheon, who released a statement on the news, said it would be seeking 'emergency talks' with the Home Office to address this:
"We appreciate the Home Office is operating under significant budget constraints but a default notice is not an appropriate way to achieve the important objectives of this programme." it said.
The company added that since starting work on the programme, it had significantly improved UK border security.
Talks are now ongoing as the Home Office seeks to find a way to continue the project.