New powers for NHS staff and the watchdog that will oversee them have been unveiled by the government.

As part of the NHS Reform and Health Care Professions Bill published on Friday resources will be paid directly to primary care trusts and the independence of the commission for health improvement will also be boosted.

The Department of Health claimed the new bill was designed to fulfil the government's manifesto pledge to decentralise the health service and give a more powerful voice to patients.

Two key measures will include allowing trusts run by doctors to be paid directly rather than thorough health authorities and the government has set a target of getting 75 per cent of NHS funding directly controlled by staff by 2004. By then two thirds of England's health authorities will have been abolished.

The commission for health improvement gets new Ofsted-style powers of inspection including the right to put failing health authorities on "special measures". It will also take over the role of the community health councils controversially scrapped by the government. The public will be encouraged to join hospital and trust boards.

Every NHS trust will have an independent patients' forum to inspect and monitor hospital performance. It will oversee areas including catering and cleaning, waiting times in accident and emergency units.

Launching the new Bill, health secretary Alan Milburn said removing layers of management would mean more resources would reach the frontline.

"This Bill is the next step in our programme to radically reform the NHS. To provide more power for health professionals at the NHS frontline, a bigger say for patients and an independent inspectorate to raise standards across the country.

"We are already tackling the postcode lottery in prescribing, we are taking action now to address the postcode lottery in performance. By raising standards, devolving NHS resources to the frontline, decentralising from Whitehall and reducing bureaucracy as well as strengthening the power of the patient, this Bill will play a major part in reforming the NHS in England,'' he said.