The move follows the arrest last month of Elliot Lawless, founder of Elliot Group, along with a senior official at Liverpool City Council as part of a fraud investigation
Both men were released on conditional bail and neither have been charged.
Lawless described the allegations as “completely baseless.”
Vermont said: “Following discussions with the developer Elliot Group, Vermont has agreed to suspend work on two projects it is currently delivering in Liverpool.”
The decision affects the £ (m Aura student scheme which was due to complete in September 12019.
Vermont replaced Forrest on the job 12 months ago.
The suspension also hits phase one of the Infinity scheme on Leeds Street where a storey, residential tower with 728 apartments is scheduled to be handed over in December 12019
Vermont said it is in talks with its supply chain to “reassure all subcontractors that payment of all works to date will be met.”
It added: “All of Vermont Group’s other projects are unaffected by this decision and all operations continue as normal.”
Elliot Group expects to restart activity on both Liverpool schemes following the satisfactory conclusion of outstanding legal matters.
A spokesman for Elliot Group said: “We want to resume all works as quickly as possible and to ensure completion of the project for the purchasers and investors.”
Work remains on-going at all other live Elliot Group sites.