NHS chief executive Sir Alan Langlands has been forced into a grudging and embarrassing admission of NHS Executive failures in handling the Read computer codes.

In a 'good practice' circular issued last week to health authority and trust chief executives, Sir Alan outlines what he calls the 'lessons' of the public accounts committee's damning report on the NHS Executive's handling of the issue.

But despite a call from MPs for a moratorium on developing the codes further, the document says version three will get the go-ahead 'subject to an independent review currently under way'.

The circular says: 'It is important to note that the auditors criticised lax management on the part of the NHS Executive in the past, not the quality of the clinical terms version three product itself.'

It adds that, even though Sir Alan had agreed to circulate the MPs' findings, 'these weaknesses are clearly not typical of the NHS at large'.

The circular tells trusts and HAs to ensure that conflicts of interest do not affect 'or appear to affect' decisions and not to put staff in charge of budgets 'that might favour their own interests'.

Mr Langlands concludes by 'confirming' that a 'clear management and accountability framework' was put in place at the NHS Centre for Coding and Classification and auditors have 'endorsed the new procedures'.

The circular also deals with other issues, including self-employed staff, financial control and delegated authority.