Lord Rogers has been dropped from his role as architect of the new Welsh assembly building amid concerns over mounting costs.

However, the Richard Rogers Partnership has hit back, saying it rejected "being made a political scapegoat for a catastrophic failure properly to manage the project."

The announcement that RRP was being ditched was made by Welsh finance minister Edwina Hart in the assembly on Monday.

She said that "it will not be possible to deliver the new assembly building within the approved construction budget of £13.8 million and therefore within the overall project budget of £26.6m."

It was now thought likely that the total project would cost over £40 million, she revealed, despite design changes which had resulted in some cost reductions.

Assembly members voted to suspend construction while cheaper tenders were investigated.

Most of the increased costs, said Hart, "are not due to client changes or enhancements. In total, we estimate that even on the most generous interpretation, only about £1.2m of the increase is due to the client".

"I very much regret that it has not been possible to proceed with the scheme as originally proposed," she concluded.

An RRP spokesperson rejected the finance minister's criticisms, saying that the architects had warned that client changes, the political requirement to use indigenous materials at any cost and exceptional contractor charges meant the project could not be built within the construction budget of £13.1 million.

"It is plainly untrue for the finance minister to assert that RRP underestimated the costs," said the spokesperson.

"The procurement process and its management has been highly inflexible, adversarial and divisive. It has discouraged competitive bidding and has resulted in prices from local contractors considerably more expensive than are currently available from continental contractors on other projects. RRP has advised that unless changed, this process will produce poor value for money," the architects added.

Work on the new building on the waterfront at Cardiff Bay started four-and-a-half months ago. It comprises a debating chamber, committee and meeting rooms as well as a suite of other rooms.

First minister Rhodri Morgan did not address AMs in the assembly, but on Tuesday his official spokesman stressed that value for money must be the most important priority.

The Conservatives called on the first minister to resign over the announcement. Rod Richards told assembly members that the buck stopped with Rhodri Morgan.

Plaid Cymru's leader, Ieuan Wyn Jones, said the news was "no embarrassment to the Welsh people but it is a massive embarrassment to the government."