'The government has decided to cancel the RFP (request for proposal) for 197 helicopters for the army. A fresh RFP will be issued soon,' Defence Ministry spokesman Sitanshu Kar said.

A fresh tender will be issued early in the new financial year, which begins in April, an official of the policymaking Defence Acquisition Committee said.

The deal was awarded to the European Aeronautic Defence and Space Company (EADS), which makes civilian and military aircraft, in February as part of an army modernisation programme to replace the Indian military's ageing fleet of Cheetah and Chetak helicopters.

A government official who did not want to be named had said earlier that New Delhi was probing links between an army general and Indian agents of Eurocopter, part of EADS.

India banned middlemen in military deals following allegations of bribery in a multi-billion-dollar artillery deal in the 1980s that brought down the government of former premier Rajiv Gandhi.

Last on Wednesday, Eurocopter denied Indian media allegations about the involvement of middlemen in the project.

'EADS and Eurocopter are keen on insisting that both companies fully comply with the very strict French and European regulations on these issues,' Eurocopter said. It added that it 'was still confident to sign the contract with the Indian Ministry of Defence'.

The deal with Eurocopter, the global leader in sales of civilian and military helicopters, with than 50 per cent of the world market, was suspended in June on the recommendation of a federal watchdog overseeing government purchases.

'Some aspects of the deal probed by the Central Vigilance Commission also included complaints from (US-based) Bell Helicopter that it had been rejected on flimsy grounds,' a committee official had said on condition of anonymity.

AGENCE FRANCE-PRESSE