The sudden death of Heath Ledger has shut down the film he was working on up until last weekend: Terry Gilliam's $30million Faustian fantasy The Imaginarium of Doctor Parnassus.

The film's makers have issued a statement saying: "Terry and the producers will be assessing how best to proceed."

The producers also paid tribute to the 28-year-old Australian actor, calling him "a great actor, a great friend and a great spirit".

"We are still in a state of deep shock, saddened and numb with grief," the statement continued.

Ledger's star power was a big factor in Gilliam raising the funding for the film, according to Variety, the industry newspaper.

Shooting of the first third of the film began in London last month and finished at the weekend. The production team was gearing up for a 40-day shoot in Vancouver when news broke late on Tuesday that Ledger had been found dead in his rented New York apartment.

Bottles of anti-anxiety pills and sleeping medication were found close to his naked body, police said. Despite rumours of drug abuse in Ledger's past, a post-mortem examination proved inconclusive and further tests to reveal the cause of death are expected to take at least a week.

Ledger, who was nominated for an Oscar for his portrayal of an emotionally stunted cowboy in Ang Lee's Brokeback Mountain, was the biggest draw in Gilliam's cast, which also included Christopher Plummer, the English model Lily Cole and the gravel-voiced singer Tom Waits.

The Director and star had previously worked together on The Brothers Grimm.

In The Imaginarium of Doctor Parnassus, Ledger played a mysterious new member of a magician's troupe. Plummer plays the eponymous magician who has developed extraordinary powers by trading them for his teenage daughter's life in a deal with the Devil.

The producers and their insureres now have three options: replace Ledger in the role, shoot around him, as Ridley Scott did when Oliver Reed died close to the end of filming on Gladiator (he spent an estimated $2million on creating Reed's final scenes using computer imagery) or shut down the production entirely.

The last option would be a wearyingly familiar one for Gilliam, whose disastrous attempts to make his pet project The Man Who Killed Don Quixote became one of Hollywood's best-known cautionary tales. The production suffered freak flash-floods and was abandoned after Jean Rocheforte, the 70-year-old lead actor, became seriously ill.

Greg Chambers, business manager for the craft union ACFC West, told the Vancouver Sun newspaper that The Imaginarium of Doctor Parnassus was "currently listed as a force majeure".

Force majeure is a clause which allows producers to end contracts in extraordinary circumstances.

Mr Chambers added that about 100 crew members had been laid off as a result.

Doubts also surround Ledger's final completed project. Early reports suggest that he delivers a stand-out performance as The Joker opposite Christian Bale's Batman in Christopher Nolan's The Dark Knight. Warner Bros. has centred advance marketing for the film on Ledger's character and are now reconsidering their strategy in the light of his death. The film is due to be released on July 25.

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