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Further details from BBC News Online

The aim is to ensure the NHS gets better value for money by stamping out variations in the cost of operations.

Ministers say the "fundamental reform" will make the NHS more efficient but critics say it could cause some trusts to cut services.

It comes as the government confirms that treating NHS patients in private hospitals is proving expensive.

The NHS paid private hospitals �100m last year to treat 60,000 patients as part of efforts to cut waiting times.

What hospitals will be paid? Heart bypass �8,080 Hip replacement �5,568 Cataract operation �786 Varicose vein procedure �1,063 Major breast surgery �2,386 Figures are for planned operations Source: Dept. of Health Q&A: How the tariffs will work

The new NHS tariff sets a fixed price for 48 different procedures, ranging from cataract surgery to a heart bypass operation.

The tariffs will be phased in over the next four years. However, foundation trusts will be able to adopt them from April.

There are currently huge variations in the amount of money hospitals are paid for carrying out certain operations.

The price of a heart bypass operation ranges from �2,540 to �6,911. The cost of cataract surgery varies between �763 and �1,164.

More efficient

Ministers say a fixed fee will force many hospitals to become more efficient. Hospitals that fail to reduce their costs will face losing millions of pounds a year.

Those that succeed in providing the operations below the tariff price will be able to keep the profit. That money could be spent on new equipment.

Ministers hope the system will also drive up quality and improve choice for patients.

Given that the NHS cannot afford to lose staff, how will these savings be made? British Medical Association

"And secondly, it will allow patients to exercise greater choice over when and where they are treated."

However, the British Medical Association expressed concerns.

"The tariff system could cause the NHS problems," said its chairman James Johnson.

"Some tariffs will be far lower than the real costs of providing care, putting undue pressure on hospitals to make cuts.

"Given that the NHS cannot afford to lose staff, how will these savings be made?"

Mr Hutton defended the government's use of private hospitals to cut NHS waiting lists despite the relatively high cost.

"Our use of the private sector allowed nearly 60,000 NHS patients to have their operation more quickly than would otherwise have been possible. That was absolutely the right thing to do."

However, trade union Unison condemned the policy.

Karen Jennings, its head of health, said the private sector was "ripping off the NHS... at the expense of patient care".