It means the health board will have to pay the Robert Jones and Agnes Hunt Orthopaedic Hospital Trust just £301,451 for work carried out last year rather than the £1.1 million claimed by the hospital.

That amount is less than half a payment offer of £644,000 made by the board to the hospital before the wrangle went to arbitration.

But the dispute had caused hundreds of Powys patients to fear that future treatment at the Orthopaedic could be axed.

Andy Williams, chief executive of Powys LHB, acknowledged today that the dispute had caused concern to patients but said that had the board paid the hospital what it claimed, it would have had to find the extra £800,000 by cutting care.

He said: “The last few months have been very difficult for all concerned in this case, not least of all patients caught up in this dispute. Nevertheless, I feel that the stance taken by the Local Health Board has been vindicated by this arbitration decision.

“The fact that the arbitration decision has effectively meant that we have had to pay even less than we offered simply emphasises how far the Local Health Board had been prepared to go in order to try and find a solution to this problem.

Jackie Daniel, the Orthopaedic’s chief executive, said the trust would respect the decision.