The Ministry of Defence is pulling the plug on expensive IT projects as it redirects funds into the essentials of the Afghan war — guns, bombs and basic logistics.

This is a cruel blow to computer companies, already hit by a dramatic downturn in civilian spending, that were hoping for a war bonus from bumper defence spending.

But industry observers said that computer companies who can would do well to concentrate their efforts on the high street, where consumer spending remains buoyant.

Most recently, the MoD canned a supply chain project from US software house Indus that was intended to make acquiring spare parts cheaper.

The cancellation wiped about six percent off Indus' annual turnover at a time when it has already suffered seven consecutive loss-making quarters and had three former executives sued by the US Securities and Exchange Commission for fraudulent accounting.