Struggling NHS trusts have received more than £1 billion in bailout funds in six years, figures show.
The Department of Health gave emergency funds to four foundation trusts and 17 trusts between 2006 and 2012, the National Audit Office said.
Cash-strapped trusts needed the money to pay creditors and staff, according to the NAO report into the financial sustainability of the NHS.
The news comes after South London Healthcare Trust became the first in the country to go under the control of a special administrator tasked with putting it on a viable footing.
The trust, and its predecessors, have needed a total of £356 million over the last six years, and not paid any back, the NAO said.
Another London trust, Barking, Havering and Redbridge University Hospitals Trust, was given £195m by the Department of Health to aid its dire finances.
Between 2010 and 2011, struggling trusts had to be bailed out to the tune of £76m but this figure drastically increased last year to £253m, the NAO said.
The report also revealed that 34 trusts, including three primary care trusts, 10 trusts and 21 foundation trusts, reported a deficit in 2011 and 2012.
It is estimated that trusts and foundation trusts are likely to need around £300m more in bailouts in 2012 and 2013.
But the NAO stated that in 2011-12 there was a surplus of £2.1 billion across the NHS as a whole.
Struggling trusts face even more financial turmoil in the next few years. The NHS must make up to £20bn efficiency savings before 2015.
NAO head Amyas Morse said: “So far the NHS is meeting the challenge of maintaining strong finances in a period of austerity.
“It is clear, however, that parts of the service are under strain.
“For value for money to be delivered in future, two things are required: firstly, careful management of the risks created by transition to a new commissioning model; and, secondly, a coherent and transparent financial support mechanism which outlines when trusts should be supported, or allowed to fail.”
Margaret Hodge, chair of the Committee of Public Accounts, added: “It is shocking that over the past year alone the amount the Department for Health has had to spend on bailing out trusts in financial difficulty rose by 333 per cent.
“Two trusts in particular received significant support; South London Healthcare Trust (£79m) and Barking and Havering and Redbridge University Hospitals Trust (£55m).
“My concern is for the members of the public who rely on the vital healthcare services in these areas.
“There was a total surplus of £2.1bn last year, but once a trust becomes a foundation trust, the department is unable to claw back any surplus money which it could otherwise use to ensure the delivery of health services.
“This report says that there are 31 trusts in deficit but it remains unclear what will happen if a trust goes into administration.
“If trusts are allowed to go bust, it would be unacceptable for people in poorer communities to suffer from poorer health services as a result, exacerbating the postcode lottery that already exists.
“My committee will want officials to tell us what systems are in place to prevent this.
“The department must do more to help struggling organisations make the efficiencies essential to the financial sustainability of the NHS.
“Half of PCTs are concerned about the long-term financial prospects of their healthcare providers.
“Action is urgently needed to ensure a viable financial future for a large number of healthcare providers and to maintain public confidence in the ongoing delivery of their local services.”
Sue Slipman, chief executive of the Foundation Trust Network, said: “The Foundation Trust Network believes that the financial sustainability of NHS organisations is best achieved by having an all-foundation trust provider sector, in which organisations have strong leadership, deliver high quality care and are efficiently managed.
“‘This needs to go hand in hand with mature and professional commissioning of healthcare services and a system of regulation that is proportionate, risk based and enables innovation to benefit patients.”