The budgets will be rolled out before April 2014 and first offered to all patients receiving NHS continuing healthcare.
The scheme will allow around 50,000 patients to choose and direct the care they receive.
Mr Lansley said: ‘Personal health budgets clearly fit with the future direction of a modern NHS - an NHS which focuses on quality and gives patients more control and choice.
‘They allow people to work with the NHS so that they can receive more personal, more tailored care which fit with an individual’s life and uses resources most effectively.
He said the roll-out must be accompanied by a ‘cultural shift’ by doctors, healthcare professionals, providers and patients. 'It will personalise the NHS and provide more integrated high quality care across health and social care,’ he said.
A pilot of around 1,300 patients with various conditions including mental health and long-term conditions is running until October. The results will inform the wider roll-out.
GPs are already involved in selecting patients for pilots and clinical governance of the budgets.
The DoH hopes the budgets will improve patient experiences by delivering care in the most appropriate setting and by the provider of their choice.
The NHS Future Forum report had recommended personal budgets within five years to give patients access to tailored services.
The Alzheimer's Society's chief executive Jeremy Hughes said it was 'promising' to see personal budgets being more widely rolled out.
But he warned: 'Unless the system is made easy to understand and people are properly supported, the complexities of personal budgets could become the straw that breaks the camel’s back rather than the empowering tool they are intended to be.
'But if done in the right way, this could be a key milestone in the ongoing mission to create a health and social care system that works for everyone.’