Connecting for Health is to be stripped of its policy setting functions and turned into a delivery agent for the national programme for IT.
The change could pave the way for a quiet U-turn for the stalled programme, following pressure on the government to allow NHS organisations to choose their own IT systems provided they can work to shared standards and draw up protocols for talking to each other.
A CfH internal memo - seen by HSJ - says the organisation’s policy setting functions will be transferred to a new informatics directorate at the Department of Health which will "own the overall technical architecture to be used by the NHS and DH and will ensure systems developed conform to that architecture".
A source close the development of the programme said that would allow the DH to shift the emphasis from the central procurement of predefined systems to allowing flexible local procurement of systems fitted around a standard core.
The programme is scheduled to cost£12.7bn but the setbacks mean most of that has not been spent yet as the contracts only pay on delivery.
There is a danger some of the cash could be clawed back by the recession-hit Treasury, but the source said there was now a "big opportunity" to use a change [in the national IT programme] to engineer a significant boost to the UK’s software and informatics industry, as new developers could step in to provide bespoke systems for NHS organisations.
"That could happen almost overnight," he said. "There are a lot of clever people out there and a lot of primary care trusts and trusts that need their help."
A number of trusts have began working more closely with their software providers to adapt the IT programme software to their local needs.