iSoft, the software company at the centre of the health services multibillion-pound overhaul, is under investigation by the Financial Services Authority (FSA).

'The group has now received notification from the FSA that they will be undertaking a formal investigation into the possible accounting irregularities,' iSoft said in a statement.

In the last month the company has said that a provisional inquiry by its auditors Deloitte, unearthed accounting irregularities for its 2004 and 2005 accounts as revenues for both these years were presented in the accounts sooner than they should have been.

The Serious Fraud Office has also been alerted to the situation, The Guardian suggested this morning.

Labour MP Paul Farrelly has also called on the Department for Trade and Industry to investigate the company.

The software company's shares dropped a further 2.5p to 41.25p yesterday.

iSoft must re-state its results tomorrow or its shares, which have already gone down 90p this year, will be suspended.