Healthcare providers will not compete for NHS contracts on price following a clarification from the government.
The move has been applauded by doctors and may ease the fears of some who suggested the NHS would become dominated by cost rather than patient care.
As a response to those concerns the Department of Health (DH) said it had made amendments to the Health and Social Care Bill which is currently proceeding through Parliament.
The government has changed the sections which would have made it possible for providers to bid for contracts at a price below the standard NHS tariff and should also prevent the possibility of differential pricing between NHS and private providers.
It said: "The amendments clarify our position on price competition by removing all the phrases 'maximum price' from the Bill.
"This phrase has resulted in confusion, with some parties claiming that it could allow some providers to undercut others. These amendments will remove any confusion about the wording of the Bill.
"We want the tariff to be a nationally-regulated price, not a starting-point for price competition," it added.
Andrew Lansley MP, Health Secretary, confirmed the government changes in a letter to the British Medical Association (BMA), acknowledging the current wording was open to different interpretations.
Lansley wrote: "I fully accept that it is the case, under the existing legislative framework, that ministers have had complete freedom to introduce price competition should they so wish; and that the bill as currently drafted continues to allow for the possibility of tariffs to be set as maximum prices, rather than set solely as fixed prices.
"You are entirely right in observing that, whilst the government's intention not to introduce a general policy of price competition is clear, it is a possibility that Monitor could in future seek to pursue a different approach, subject to agreement with the NHS Commissioning Board."
Lansley added that the government had not intended to introduce price competition.
The BMA has welcomed this commitment not to allow healthcare providers to compete for NHS contracts on the basis of price.
Dr Hamish Meldrum, chairman of council at the BMA, said: "Price competition has been linked with lower quality and was of huge concern to the BMA and many others.
"We welcome the fact that the Health Secretary has not only listened to doctors' views, but also acted on them. There is of course still a long way to go to address all the concerns doctors have about the Bill, such as Monitor's powers to enforce competition.
"We will continue to press for further improvements and hope the government will continue to listen," he added.
