A top-level study ordered by Prime Minister Scott Morrison of the nation’s submarine program will look at how to terminate the $90 billion project with French government-owned shipbuilder Naval Group, amid questions over whether Defence Minister Linda Reynolds will hang on to the portfolio after being admitted to hospital.

Although dumping the contract would risk a big diplomatic rift with France, defence industry sources said a potential resignation by the minister might give the government the opportunity to reset the troubled submarine and frigate construction programs.