Greater independence and a wider role for the Commission for Health Improvement were set to form a key plank of the NHS Reform Bill due to be put before Parliament on Friday.
The bill was also expected to provide a legal framework for the structural reorganisation outlined in Shifting the Balance of Power, new measures for patient and public involvement after the government's defeated attempt to abolish community health councils in the last parliamentary term, and measures for 'regulating the regulators'.
HSJ understands that CHI will have the ability to recommend that NHS organisations be put on 'special measures' - with sanctions that could be lifted when required standards are reached - as well as taking over responsibility for applying the star-rating system.
This would signal a significant change of approach, bringing it closer to that of education watchdog Ofsted.
In line with the recommendations of the Kennedy report on the Bristol inquiry, CHI will also be given greater independence from the Department of Health, reporting to Parliament, possibly via the health select committee.
The bill will give the government a second stab at abolishing CHCs. But its patient and public involvement proposals are expected to be significantly different to those published in September, following the DoH's sixweek listening exercise.
The proposed staff-only Voice organisations have attracted widespread criticism, with campaigners highlighting an absence of lay member involvement above individual trust level and lack of co-ordination across local health economies.
It is anticipated that the measures in the bill will revert back to the 'patients' council' model - grouping together local patients' forums of lay members - proposed by Commons health committee chair David Hinchliffe, which was reluctantly accepted by the government during the parliamentary wrangle over last term's Health and Social Care Act.
CHCs are set to get an extra year's allocation of money for 2002-03, as the DoH admitted that it would be 'some time' before any provisions passed by Parliament could be put in force.
The DoH is also setting up a transitional management board made up of 'a wide stakeholder group' to support both 'the continued operation of CHCs' and future changes.
The bill is also set to contain measures creating a body to 'regulate the regulators', following the NHS plan pledge to establish a UK Council of Health Regulators co-ordinating the General Medical Council, the Nursing and Midwifery Council and the other professional regulatory groups.
In addition to a co-ordinating role, the plan warned: 'Were concerns to remain about the individual self-regulatory bodies, its role could evolve.' It is expected that continuing ministerial frustration with the GMC will mean the new body having its own regulatory role in a bid to keep the GMC in line.
The Shifting the Balance proposals must go before Parliament in order to transfer the statutory nature and duties of health authorities to the new structures.
Measures to introduce a 'no-blame' compensation scheme, fixed tariffs for medical negligence payouts and a changed role for the NHS Litigation Authority are set to be published later in a white paper.