The number of health quangos are to be cut by half over the next three years, John Reid has announced.

The move follows a review of "arms length bodies", the results of which were published on Thursday.

The study found duplication of functions between some organisations, along with unnecessary regulatory activities and a need to rationalise "back office" functions such as human resources and IT.

In addition, the report exposed a potential for some organisations to merge, or to be given independent status with greater "stakeholder" control.

The latest developments follow the Gershon review, which advised that £15 billion a year could be saved through greater efficiency and the loss of 80,000 civil service jobs.

In a Commons written answer, health secretary John Reid confirmed that by 2007/08, the number of quangos would be reduced by 50 per cent, saving as much as £500 million and reducing the number of posts by a quarter.

"I want to see more staff and resources at the frontline delivering better patient care across the country," he said.

"I want to see improved efficiency, reduced bureaucracy and better value for money.  The Department of Health is leading the way and we have already announced that we are cutting the number of civil servants by 38 per cent. 

"But it's important that this shift in the balance of power away from Whitehall to patients and frontline staff in the regions is carried out across the NHS.  Now, the first stage of the review has made clear that there is considerable scope for further savings among the national functions sponsored by the Department of Health.

"The arms length body sector does much good work.  However it has grown over several decades and does not meet current health and social care needs or those of future generations.  If left unchanged the arms length bodies would employ about 10 times the number of staff at the Department of Health at the end of its restructuring programme.

"Changes on this scale would mean that considerable extra resources could be redeployed on the ground.

"The next stage of the review will involve consulting with individual bodies on proposals for merger, renationalisation or abolition. 

"This should be completed by the end of June, so that the final outcome can be announced before the summer recess."