Lancashire CC’s award of a contract to Virgin Care has been blocked by a legal challenge.
High Court judge Mr Justice Stuart-Smith ordered the decision to appoint the firm to run public health nursing services for children to be set aside.
Lancashire Care NHS Foundation Trust and Blackpool Teaching Hospitals NHS Foundation trust, which currently run the service, launched the legal challenge.
They will continue to deliver their contract until March 2019 as the council weighs up its options.
Lancashire's cabinet member for health and wellbeing, Cllr Shaun Turner, said: ‘Although we’re disappointed in the outcome of this judgement, we are reassured with the exception of the moderation element, the county council's procurement processes was appropriate and that individual panel members were not found to be at fault.
‘However, following this judgement, we accept that we cannot award the contract at this time.
'We are now considering our options about the next steps.’
Earlier this week, it was reported that Virgin Care reached an out-of-court settlement worth £2m after an £82m contract providing medical services for children in Surrey was awarded to NHS providers and a social enterprise.
Surrey CC paid out £440,000 while NHS England and six clinical commissioning groups paid a combined £1.6m.
Another £243,000 was spent on legal fees.