The government has dropped foundation trust proposals that had been criticised by the trusts, their regulator Monitor and former health secretary Patricia Hewitt.

It had planned to give ministers power to tell Monitor to take action against failing trusts, in response to the Mid Staffordshire Foundation Trust scandal.

The government accepts that the use of Monitor’s other powers of intervention and decisions about day-to-day intervention should remain matters for Monitor

Ministers were concerned they couldn’t step in at Mid Staffs because of its independence as a foundation.

Under new plans, which were due to be added to the Health Bill as an amendment this week, ministers will still be able to ask the regulator to act when they think there are grounds to strip a trust’s foundation status altogether.

However, a Department of Health document says it “tested the option” of a power for the health secretary “to formally request that Monitor considers intervention other than de-authorisation”.

It says: “Following responses to the consultation, the government is now of the view that the secretary of state’s power to request consideration of interventions should be limited to cases where he thinks there are grounds for de-authorisation.

“The government accepts that the use of Monitor’s other powers of intervention and decisions about day-to-day intervention should remain matters for Monitor.”

Monitor, which was highlighy critical of the original plan, said it was this element that it was particularly unhappy with. The conditions for deauthorisation will now be set and decided by the regulator.

Executive chair Bill Moyes, who had complained the proposals could “undermine FT autonomy and Monitor independence”, welcomed the change.

He said in a statement: “This provides valuable clarity on the detail of proposals to give Monitor additional powers to de-authorise a failing foundation trust, making it unambiguous that the decision to de-authorise will rest with Monitor. This new power is a useful addition to our regulatory regime.”

The Foundation Trust Network, which had attacked the previous proposals as a “knee jerk” reaction, said it was largely happy with the new plans. However, it still has concerns about plans to give Monitor just two weeks to respond when the health secretary calls for a deauthorisation.

This would not be enough time for the foundation to collect and provide information, the network said.

The FTN said it “believes this period should be 28 days to allow due process to take place, for the foundation trust to assemble the full evidence, to have given it proper consideration and to present the Monitor board with material of high quality so that they can make a final decision based on the balance of evidence”.

Ms Hewitt, who was considered a supporter of foundation trusts’ freedoms, last month told HSJ she had concerns about the proposals, which she had discussed with health secretary Andy Burnham.

During yesterday’s Parliamentary debate, the plans for ministers to be able to ask Monitor to strip failing NHS foundation trusts of their status were dismissed by shadow health minister Stephen O’Brien as “window dressing”.

He said the moves risked making public relations the “prime motive” for policy.

He claimed the new regime would compromise the independence of foundation trusts and give the health secretary an incentive to meddle and “play politics” with them.