HUDDERSFIELD Royal Infirmary's controversial bid to become a foundation hospital has been set back.

Health chiefs failed to convince the independent regulator that the hospital's complex financial arrangements were sound enough to win foundation status.

Its application was deferred, while 10 other trusts were successful.

Another trust had its application deferred and a third was rejected outright.

But the regulator yesterday asked managers at the Calderdale and Huddersfield NHS Trust to submit a further application later in the year.

And bosses are cautiously optimistic their bid will be successful next time around.

Mrs Diane Whittingham, chief executive, said: "Clearly in terms of the application it is disappointing not to have achieved foundation status.

"What we intend to do is take the work that has been done and build on that.

"Should we choose to resubmit later this year, hopefully we will get to successful outcome."

The setback means that work to develop the Acre Mill site across the road from the Infirmary for administration will be delayed.

Calderdale and Huddersfield was among a handful of high-flying hospital trusts which were invited to apply for foundation status.

Only three-star trusts - those that performed the best both medically and financially - were invited to join the first wave of the exclusive club.

Foundation status promises hospitals greater financial freedoms and less Government interference. But managers have to show how they are capable of running their own ship.

Calderdale and Huddersfield Trust's application has been complicated by a Private Finance Initiative (PFI) scheme to pay for the Calderdale Royal Hospital in Halifax.

The hospital opened in 2001, a month after the merger of the trusts running Huddersfield Royal Infirmary and the hospitals in Calderdale.

Within months, the newly-formed Calderdale and Huddersfield NHS Trust was £12m in debt.

And it had to enter into a three-year financial recovery period.

The trust is now in its final year of the recovery plan, but this weakened its case for foundation status. The trust has also been hit by new changes to funding arrangements in the NHS.

The move to foundation status was opposed by Huddersfield Royal Infirmary doctors, but a Kirklees Council scrutiny committee consulted with health bodies and concluded that change was inevitable and that most people supported it.