The health secretary would largely retain his powers over service reconfigurations following amendments to the Health Bill - despite previous promises he would take a “hands-off” role.

The secretary of state would retain a veto in cases where a trust has become unsustainable but briefing notes on government amendments to the bill said this power was “expected to be used only in exceptional circumstances”.

The notes say the health secretary has this right only when the trust special administrator, commissioners or Monitor had failed to follow due process, or when commissioners have failed to “secure continued access to services, or secure services of sufficient safety and quality or provide good value for money”.

The move is a retreat from Mr Lansley’s previous idea of devolving the power to a tribunal and taking a “hands-off” role in such decisions.

Chief executive of the Foundation Trust Network Sue Slipman said: “The proposed failure regime, while not as independent as we had hoped, in principle looks workable, although we will only know for sure when detailed regulations are available.

“We welcome the time limits that kick in to ensure service continuity for patients in the event of failure, but given the on-going financial challenges in the NHS the key issue is that providers need to be able to reconfigure services in order to avoid distress and failure in the first place. Unless the NHS can facilitate such changes organisations could be pushed into failing because the blockages to change at an earlier stage can turn challenge into unnecessary failure.”

Anna Dixon, director of policy at the King’s Fund, told HSJ: “The process is very different from the one they were originally proposing. They have obviously realised that a universal process of designating providers would be very difficult politically and technically. Making foundation trusts subject to insolvency was also not acceptable to the public so they have gone back to a FT sector-specific version.”

But she pointed out that the amendments still left the health secretary leeway to veto reconfigurations on judgements like reasonable access to treatment and value for money.

“There are political choices about these issues and where they are best made,” she said. “We would argue that where they are sat with politicians there will be pressure for them to be overturned.”

Ms Dixon said the amendments would still leave the way clear for clear for subsidising trusts at risk of failure.

She asked: “Will they actually let organisations go into this [regime]? And if they do will it become political? Will the system make the process any easier or smoother given that there are strong quality and financial reasons to do this [reconfiguration]?”

Mr Lansley still has to make decisions after receiving two Independent Reconfiguration Panel reports on contentious hospital reconfigurations, involving Barnet and Chase Farm Hospitals and King George Hospital, both in north London. A decision on the former is expected this month.