Health minister Katy Gallagher revealed yesterday that negotiations to buy the hospital recommenced two weeks ago following the collapse of the first agreement in February.

Chief minister Jon Stanhope wrote to the Catholic Archbishop of Canberra and Goulburn Mark Coleridge on Friday outlining a deal to buy the Calvary buildings while LCM continued to provide heath- care services.

Clare Holland House is not part of the discussion.

Chairman of the Little Company of Mary Health Care Tom Brennan said he supported the fledgling proposal.

''We're happy for this to go ahead. Because of the Archbishop's position on the earlier proposition it couldn't go ahead. If he agrees to this, then I expect that it would go ahead and go ahead very quickly,'' Mr Brennan said.

Ms Gallagher laid the blame for the collapse of the $77 million sale to the ACT Government at the feet of Archbishop Coleridge.

The Vatican, which has carriage over the final decision, would seek Archbishop Coleridge's advice before endorsing the proposal.

The Canberra Times was unable to contact Archbishop Coleridge last night. Ms Gallagher said the Archbishop was cautious when the Government approached him with the new proposal.

For more on this story, see the print edition of today's Canberra Times.