PANAMA CITY (AFP) - An international consortium in charge of widening the Panama Canal Wednesday suspended work on the troubled project, canal administrator Jorge Quijano said.

Grupos Unidos por el Canal, the Spanish-led consortium, "just a few moments ago suspended the work," said Mr Quijano.

"They put a threat on the table, and today (Wednesday) they carried it out," he added.

The project to widen the canal, one of the biggest civil engineering operations in the world, is due to be completed next year but is bedevilled by a dispute over huge cost overruns.

GUPC has said unforeseen costs total US$1.6 billion (S$2 billion) beyond the initial US$3.2 billion value of the contract.

Mr Quijano said the "inflexible position" of the GUPC stalemated negotiations over who should pay for the extra costs. "We demand the work be restarted immediately," he said, adding that a proposal to cancel the GUPC contract is still on the table.

Sacyr, the Spanish company leading the work, Wednesday morning blamed the canal authority for the collapse of negotiations.

In a statement, the company said the consortium would "continue to seek a solution to finance completion of the project and work in 2015, despite the decision of the Panama Canal Authority to break off negotiations." It said that the collapse of the talks "puts in danger the widening of the canal and up to 10,000 jobs." The consortium had threatened at the end of December that it would suspend work in three weeks' time if Panamanian authorities did not provide the extra finance demanded. That deadline was allowed to pass, but another for progress in the talks ended on Tuesday.

The canal, completed in 1914 to offer a short cut and safer journey for maritime traffic travelling between the Pacific and Atlantic oceans, is about 80 kilometers long and is used by 13,000-14,000 ships each year.

The canal facilities are being widened to permit the passage of ships carrying up to 12,000 containers, twice the current limit.