NHS chiefs are to go back the drawing board over plans to hand over the Dilke and Lydney hopsitals to a new body.

NHS Gloucestershire has settled a judicial review out of court.

Stroud pensioner Michael Lloyd, 76 challenged the bid to hand over all community hospitals and services in the county to a community interest company.

Campaigners claimed Gloucestershire Care Services was privatisation by the back door.

In a joint statement, both parties said that an end to legal proceedings was in everyone's interest.

NHS Gloucestershire and Mr Lloyd said: "The Primary Care Trust (PCT) has agreed not to implement its decision to enter into a contract with Gloucestershire Care Services at this time.

"The PCT has agreed that it will start a new process to explore the best option for providing community services in Gloucestershire."

"Members of the public and NHS staff will be invited to engage with future plans seeking expressions of interest for the provision of NHS services in the county."