Community foundation trusts could combine the provider arms of more than one primary care trust to avoid them being unviable as stand-alone organisations.
Department of Health director-general of provider development Andrew Cash told the NHS Alliance conference in Bournemouth that there would probably be only 20 or 30 CFTs across England - compared to 152 PCTs.
He said the DoH intended to limit the number of CFTs in response to concerns from foundation trust regulator Monitor about the viability of trusts with turnovers of less than£30m.
Mr Cash told delegates that feasibility work on CFTs was almost complete and that five to 10 pilots would get underway soon.
'I don't think we should see community foundation trusts as just being coterminous with PCTs,' he said. 'We will probably not end up with 152 community FTs; there will be about 20 or 30 of them. We have got to make sure there is resilience, that the governance is tight. There will be a range of models and it depends what works locally.'
Health minister Lord Warner asked Monitor to review whether they could apply their authorisation, compliance and monitoring processes to the DoH.
Monitor chair Bill Moyes told the conference his team had looked at organisations with a turnover of more than£30m and 'we are quite clear that they can exist within our framework with no lowering of our standards'.
But he warned that the DoH should be 'cautious' if it wanted to go ahead with CFTs with turnovers smaller than£30m. 'We would say, start at a level that is easily manageable and we can extend it to smaller CFTs if it works.'
Mr Moyes said he hoped the pilots - including the establishment of shadow CFT boards - would be underway by April, allowing the first CFTs to come into force in April 2008.
And he said he believed that CTFs would undergo quite a slow transition to a tariff-based system, in a similar way to mental health foundation trusts.
DoH social enterprise unit head Sue White told another conference session that PCTs should undergo a fitness-for-purpose assessment before deciding to go for CFT status.
She said a CFT would be 'medium to large, have a legislative framework and be regulated by Monitor'. 'It would have social enterprise behaviour but exist within an NHS organisation,' she said. 'Social enterprises are smaller, with light touch regulation from the Financial Services Authority and the Community Interest Companies regulator.
'They could co-exist, with CFTs being an umbrella organisation contracting with social enterprise.'