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The NHS in England is to undergo a major restructuring in one of the biggest shake-ups in its history, the government has announced.

Hospitals are to be moved out of the NHS to create a "vibrant" industry of social enterprises under the proposals.

And, as expected, GPs are to take charge of much of the budget.

The move will lead to the abolition of all 10 strategic health authorities and the 152 management bodies known as primary care trusts.

The new structure will be held accountable by an independent NHS board which would be free from political interference, the government said.

Meanwhile, responsibility for public health will be passed to local authorities.

In many ways, the plans outlined in a White Paper go further than expected. The coalition agreement had promised no top-down reorganisations.

But Health Secretary Andrew Lansley said he had decided to go further than first envisaged to rid the health service of "unnecessary" bureaucracy.

He said the proposals would be challenging and turn the NHS "upside down" but in doing so help reduce management costs by nearly a half within four years.

He added: "The government's ambition is for health outcomes - and quality services - that are among the best in the world."

'Experiment'

The GP move had long been championed by Mr Lansley - and in recent months the British Medical Association had indicated it was willing to work with him on the idea.

The plans mean GPs working in groups will be in charge of a vast collection of hospital, mental health and community services - although specialist services and dentistry will not fall under their remit.

Under the new system, the independent board will sit above as many as 500 consortiums of GPs to set standards and hold the groups to account.

Another key aspect of the changes involves giving patients more information and choice. To achieve this, a new body, HealthWatch, will be set up to compile data on performance, while GP boundaries will be abolished to allow patients to register with any doctor they want.

Mr Lansley also announced he expected all NHS trusts, which run hospitals and mental health units, to get foundation status by 2013.

He also said he would be relaxing the rules which cap the amount of income a trust can make outside the NHS, opening the door to them seeing more private patients.

He said this would allow them to innovate and widen the scope of what they did, but he also admitted it would mean those which were not financially viable could go under.

The government will now consult on its plans before rolling them out over the next three years.

Professor Chris Ham, chief executive of the King's Fund think-tank, said: "It is a very radical programme. We have never seen anything like this since the inception of the NHS in 1948."

But he said the moves were not without risk, pointing out some GPs would not have the skills to manage the budget.

Shadow health secretary Andy Burnham went further, describing the changes as a "political experiment".

"It is a huge gamble with a NHS that is working well for patients."

There was a mixed reaction from NHS staff. Unison said the changes could lead to "chaos", but the BMA said they could benefit patients and it was looking forward to working with ministers.

Katherine Murphy, of the Patients Association, called for more clarity over how and what information would be provided to patients.

"We need more details," she added.