The Liberal Democrats would turn primary care trusts into elected bodies that would eventually enjoy tax-raising powers, the party decided at its spring conference in Liverpool.
But delegates agreed a compromise under which boards would draw one-third of their members from local council nominees, with the remainder elected by the public.
This was reached after councillors objected to leader Nick Clegg's original plan for wholly elected boards with no council input.
The dispute arose over a policy paper on NHS reform and decentralisation from the party's health spokesman Norman Lamb, and dominated the debate.
Hertfordshire county councillor Chris White, who devised the compromise, argued that the NHS could not cope with the upheaval.