NEW YORK (Reuters) - Concerns about cost overruns have prompted New Jersey to suspend all new work on an $8.7 billion Hudson River tunnel for rail commuters who travel to and from New Jersey and New York City.

Digging for the new tunnel started in June 2009, but New Jersey Transit and the Federal Transit Administration for five months have been reviewing the project to finalize federal grants, James Weinstein, the state agency's executive director said in a weekend statement announcing the work freeze.

This analysis identified additional risks that could increase the cost of the project, called Access to the Region's Core. Weinstein said: "I would not be a responsible steward if I ignored a possibility that the Access to the Region's Core project budget could change," he said.

New Jersey Transit's negotiations with the federal agency are expected to finish by the end of the 30-day work stoppage.

A New Jersey Transit spokesman declined comment on potential cost overruns for the new tunnel, which will double the number of trains now carried by the current tunnel when it opens in 2018.

A spokesman for the Federal Transit Administration was not immediately available to comment on the budget for the new tunnel. The new Hudson River tunnel is needed because the current tunnel dates back to 1910 and cannot handle all of the scheduled trains without often frequent and lengthy delays.

(Reporting by Joan Gralla; Editing by Andrew Hay)