Plans to privatise the search and rescue helicopter service have been suspended amid concerns about the bidding process to find a supplier.
It comes after the preferred supplier, Soteria, admitted it had access to commercially sensitive information.
The Department for Transport and Ministry of Defence (MoD) said the preferred supplier would not be used.
Brian Donohoe, the Labour MP whose constituency includes HMS Gannet, said there was a lot of anxiety locally.
HMS Gannet is a helicopter search-and-rescue station base at Prestwick.
Mr Donohoe said: "My main concern is that the service itself will suffer as a consequence of this continuing delaying of the process.
"I understand it is highly probable that there will be a proposal to have the Sea King, the present kit, upgraded in order that the service will be able to be maintained.
"The worst thing that can happen here is that the service to the public will suffer as a consequence of all these delays."
Maritime and Coastguard Agency chief executive Vice-Admiral Sir Alan Massey said: "I am completely satisfied with the service our search and rescue helicopters provide at the moment."
But he told the House of Commons Transport Committee: "I have no concerns today. If you ask me how things are going to be in 2016 it might be different."
MoD Police are investigating how commercially sensitive information came to be in the possession of the bidder.
Under the plans, the successful bidder would have run the search and rescue service and provided helicopters in the UK's 12 bases.
In a statement to Parliament regarding the £6bn procurement programme, Transport Secretary Philip Hammond said: "In mid December, the Preferred Bidder in the SAR-H competition, Soteria, had come forward to inform the government of irregularities regarding the conduct of their bid team which had only then recently come to light.
"The irregularities included access by one of the consortium members, CHC Helicopter, to commercially sensitive information regarding the joint MOD/DfT project team's evaluations of industry bids and evidence that a former member of that project team had assisted the consortium in its bid preparation, contrary to explicit assurances given to the project team."
Mr Hammond said that, since December, his department and the MoD had been "working with Soteria to better understand the situation and its implications for the procurement process".
"In addition, the Ministry of Defence Police are investigating how the commercially sensitive information came to be in the possession of the bidder," he said.
He said the two departments would now "consider the potential procurement options to meet future requirements for search and rescue helicopters in the United Kingdom, including options to maintain continuity of search and rescue helicopter cover until new longer term arrangements can be put in place".
The Soteria consortium, comprising the Canadian Helicopter Corporation (CHC), Thales, Sikorsky and the Royal Bank of Scotland (RBS) was chosen as the Preferred Bidder for the Search and Rescue Helicopter (SAR-H) project in February 2010.
RBS subsequently pulled out of the consortium.
It proposed to run the service with Sikorsky S92 helicopters.
In a statement, Soteria said it was "disappointed" to learn of the government's decision.
"Soteria is evaluating the government's decision and if given the opportunity is confident that it is capable of delivering the SAR-H programme and stands ready to work with the UK government," said a spokesman.
Bob Crow, general secretary of the Rail, Maritime and Transport union, said: "This whole sordid and botched episode shows that the raw greed of the private sector should never be allowed anywhere near the life-or-death rescue services on the high seas.
"Millions of pounds of taxpayers' money has been wasted and the whole plan should now be scrapped, not shelved."