NHS trusts and primary care trusts in NHS London are now answerable for their performance to the new London Provider Agency.

Although the arm's-length body officially launched in April, it took until last week to sign formal agreements setting out its terms of reference and the way it will work with the strategic health authority.

These developments followed the arrival in June of chief executive Malcolm Stamp. Chair Lord Warner took up his post in March.

In addition to its new performance-management role, the agency will support foundation trust applications, including those for community provider foundation trusts. It will run London's capital investment programme and lead the development of the estate strategy.

London wants all 25 acute and seven mental health trusts to become foundation trusts by 2009.

NHS London chief executive Ruth Carnall said: 'We have successfully developed and implemented a new performance-management regime through the commissioner and provider regimes. This is a radical approach [compared] to other strategic health authorities and I am confident it will be the way forward.'