Guidelines due out shortly from the DoH are expected to limit charities and private companies to providing virgin services or services in areas where the NHS is already failing.
The policy shift has been seen as a dramatic reversal of increasing marketisation of the NHS under New Labour.
But the DoH says that failing services are more likely to be challenged to improve in future and that quality will always trump ideology in provider provision.
'What is best for patients must always come first. This could well mean more private provision, not less,' a spokesman said.
Meanwhile, Assura, the private firm behind a number of Darzi centres, has announced that its GP provider business is 'expected to be loss making for some time'.
The firm has 68 NHS services 'won or at preferred bidder stage', covering GP services, urgent care and walk-in centres.
But a statement by the firm's chief executive in its interim results for the six months to 30 September says that because of the losses, 'the board is in the process of evaluating a number of options to separate the GPCo business from the rest of the group'.
'This review of our future options for this business will be completed in the second half of the year,' the statement says.
