The NHS Modernisation Agency looks set to take a developmental rather than a punitive approach, distancing NHS performance management from the hit-squad approach.

A conference in London this week organised by the New Health Network - whose membership is close to policy makers - heard speakers from the agency dub poorly performing organisations 'challenged', rather than 'failing' in a shift from the harsh tone of the NHS plan.

With the announcement of the future head of the organisation imminent, one agency source said the new director would determine its style of working. Sue Jennings, currently head of the National Patients' Access Team and hotly tipped for the job, favours a collaborative and supportive approach to bringing about change.

Kate Barnard, project director at the agency, said four key themes - 'courage, confidence, coherence and clarity' - would guide the agency's work.

It would 'provide diagnostics and support for challenged organisations', Ms Barnard said, adding:

'Challenge is a positive thing. But we'll have clear opportunities when the traffic-light system comes in. Where we have organisations described as 'red-light', we can get in there and help.

'We want to work with the NHS not do things to them, ' Ms Barnard said, although she conceded: 'We will be part of the Department of Health and will be working very closely with the linemanagement function. '

But the agency also aims to be a 'centre of excellence' for identifying and spreading improving practice, she said. She claimed the most important thing on the agency's agenda would be 'bringing together the idea of service improvement and leadership development'. It was essential to 'make the best of the interconnection between service change and leadership change', she added.

Health minister John Denham pledged to 'make modernisation mainstream' by ensuring that the NHS Leadership Centre would prioritise the development of 'clinical change leaders'. The centre would provide all medical directors and clinical chairs of primary care trusts with support linked to their needs, he said.