The Serious Fraud Office (SFO) has been granted a 12-month reprieve, with the Home Office set to confirm that it will delay making a decision on whether or not the body will be merged into a new National Crime Agency (NCA) until next year.

Home Secretary Theresa May is expected to make the announcement later this afternoon (8 June), confirming that plans to separate the SFO's prosecution division from its investigatory function have been put on ice.

While the SFO will be able to use the 12-month period to fight for its survival, the news will be seen as a blow to the organisation, as many insiders thought it had avoided the threat of being merged into the NCA, with prosecutions to be dealt with by the Crown Prosecution Service.

The decision means next year's review of the SFO may coincide with director Richard Alderman's planned retirement in 2012.

A City fraud specialist commented: "This 'stay of execution' will not help morale or staff retention. It could well be tied to the director's tenure – we need to find out whether Alderman (pictured) will extend his term or if the Attorney General Office is starting a recruitment exercise for a new director – the process takes up to a year. If there is a recruitment process starting then it is a better sign."

Prior to today's expected announcement, both fraud specialists and SFO officials have been lobbying against the proposed break-up, with the Office's general counsel Vivian Robinson branding the proposed split as "misguided in the extreme".

One former SFO prosecutor commented: "This is the worst possible outcome for the organisation. I predict more senior exits, and that no worthy successor [for Alderman] will be found by the time he retires. At this point next year, the SFO will truly be in tatters and then the split will become inevitable."