Negotiations over massive excess costs in the expansion of the Panama Canal appeared to run into trouble on Wednesday when one of the companies involved demanded more than $1 billion (£610 million) to continue work on the project.

The Panama Canal Authority immediately rejected the proposal.

"There will be no negotiation outside the contract," canal administrator Jorge Luis Quijano said.

On Tuesday the canal authority proposed to inject $183m (£111m) into the project to allow the consortium expanding the canal to continue work for several months while a permanent solution was sought to a dispute over the more than $1.5bn (£911m) in cost overruns.

The authority wanted the consortium to put in $100 million (£60.8m).

But Italy's Impregilo, one of the corporations in the consortium, countered with an immediate demand for $1bn (£610m) from the canal authority.

Mr Quijano said the authority was sticking by its proposal for a joint injection of $283m (£172.6).

"We hope they're reasonable and let the work finish," he said.

"But we have no qualms about working with another contractor."

The consortium has claimed that unexpected problems with the quality of material to be used to make cement has spawned the massive cost overruns and blamed the canal authority for carrying out insufficient geological studies.

Overrunning costs have run to around half of Grupo Unidos por el Canal's original $3.2 billion bid to build a third set of locks.

The canal authority claims the business consortium is unjustly trying to force it to pay by threatening to halt work.