Bicester's new £10m community hospital could be built on the site of the existing hospital.
This means the North-East Oxfordshire Primary Care Trust (PCT) has abandoned the farmland site off Oxford Road and Middleton Stoney Road where it already has planning permission for the 30-bed hospital.
The PCT has given up on the site because talks had not been concluded with the site owners, Medical Centre Developments, which is part of the Hobden Group of London.
A smaller site is now needed for the hospital since earlier plans have been dropped for the complex to include a new headquarters for the Oxfordshire Ambulance Service and a replacement for Bicester ambulance station in Kingsclere Road.
If outline planning approval is given by Cherwell District Council, the new hospital would be built on land the PCT owns next to the existing hospital, which would then be demolished.
Ian Inshaw, PCT chairman, said: "As a part of the process of developing an outline business case for the new hospital, the trust is assessing a number of possible options for the development of the new hospital."
Meanwhile, there is still doubt that the new hospital and its running costs would be funded by the NHS through the Thames Valley Strategic Health Authority.
Bicester MP Tony Baldry is heading a petition calling on the Health Department to ensure finance is available.
Christopher Hobden, managing director of the Hobden Group, was unavailable to comment.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereComments are closed on this article