Key parts of a £12.7bn programme to upgrade the NHS's information technology are on the brink of failure, a powerful cross-party group of MPs warned today.

The Commons public accounts committee (PAC) said recent progress in deploying a new care records system to hospitals across England was "very disappointing".

The system was supposed to link 30,000 GPs to nearly 300 hospitals across England, providing NHS staff with instant access to the medical notes of 50,000 patients at every stage of diagnosis, treatment and discharge.

The NHS is currently forecasting a completion date of 2014-15 - four years later than originally planned. But the MPs said even this revised schedule looks over-optimistic.

By the end of last year, no hospital was yet able to use the Lorenzo version of the care records software, which had been due to operate throughout the north, Midlands and east of England.

The committee said: "There must be grounds for serious concern as to whether Lorenzo can be deployed in a reasonable timescale."

Plans to instal an alternative Millenium system in the south of England were also in doubt after the government terminated the contract of the service provider Fujitsu.

The committee said: "The programme is not providing value for money at present . . . Unless the position on care records system deployments improves appreciably in the very near future (ie within the next six months), the Department of Health should assess the financial case for allowing [hospital] trusts to put forward applications for central funding for alternative systems."

The MPs also called on the department to spell out how it will punish staff who breach the security procedures that are supposed to stop patients' confidential medical information falling into the wrong hands.

They said: "Ultimately data security and confidentiality rely on the actions of individual members of NHS staff in handling care records and other patient data. To help provide assurance, the department and the NHS should set out clearly the disciplinary sanctions that will apply in the event that staff breach security procedures."

Edward Leigh, the PAC's Conservative chairman, said: "It is worrying that, if trusts decide not to deploy the patient care records systems, the taxpayer can still be obliged to make payments to the suppliers concerned."

Responding to the committee, the NHS Confederation said hospitals are frustrated by delays in introducing the care records system.

Nigel Edwards, the policy director, added: "The time is quickly approaching to make tough decisions on what the future of the project should be ... Many of our members still do not know if they are going to get a system that works or does the things they want it to."

The Department of Health defended the IT programme. It said: "New IT systems in the NHS are delivering better, safer and faster care. Current costs have declined because of the delays to implementation due mainly to adding extra functions to the system. Costs are also controlled by the contracts which only pay to providers once the service has been successfully delivered."