The next leader of the NHS could be a senior civil servant or leading industrialist, according to Whitehall insiders.

NHS regional directors have fallen down the ranks of those tipped for the top, following the decision to merge the roles of leader of the NHS Executive and the Department of Health.

Civil service sources claimed last week that Michael Bichard, known as 'Tony Blair's favourite civil servant', was a 'very strong contender' for the job of leading the NHS, as well as public health and social care.

Mr Bichard, permanent secretary at the Department for Education and Employment, is known as an 'outsider who comes in and shakes things up'.

With a background in local government, he is not a career civil servant.

He is respected for his skills in change management and limitless energy.

A few regional directors of the NHS Executive are still in the running, according to Whitehall insiders, notably South East region's Barbara Stocking.

Chief medical officer Professor Liam Donaldson's name is also frequently mentioned. NHS chief executive Sir Alan Langlands told chief executives last week that Professor Donaldson's 'position remains unchanged' in the shake-up and he will continue to lead the DoH's public health function, as well as being CMO.

Other sources suggested a major industrialist or well-known businessperson is the most likely choice for one of Europe's biggest private or public sector jobs. But managers warned that appointing an outsider could hamper attempts to deliver the government's promises on the NHS.

Barbara Walsh, chief executive of Community Health Sheffield trust, said: 'It seems to me that the government has decided the key challenge for the NHS is implementation - we have all the policies we need.'

Appointing a civil servant would send the wrong message, she said. 'If the agenda is implementation someone who has been there and implemented things would be what they are looking for.'

Alan Randall, chief executive of Eastbourne Hospitals trust, said: 'Management within the NHS is about as complicated as it gets. This is a vastly complex organisation. I have felt reassured by the knowledge that at the top, close to ministers and civil servants, we have had people such as Alan Langlands who have been there and done it.'

But Ros Lowe, chief executive of Hounslow and Spelthorne community trust, said the change might help to spell out exactly the roles of the NHS Executive and DoH: 'There is not a lot of clarity generally in the service about the relationship between the DoH and the NHS Executive.'

Former NHS chief executive Sir Len Peach could be the person making the choice. As a civil service commissioner, he will sit on the panel which will appoint the new leader. He may even chair it, as the appointment comes at the same time as a change of personnel in the first civil service commissioner post.