GP fundholding - where individual practices run their own budgets - are to be scrapped and replaced with primary care groups.

These will be made up of 50 to 60 GPs, who will eventually become responsible for the whole of their area's health care budget.

The government says this will bring an end to the "two-tier" system of health care, whereby patients from fundholding practices could jump hospital waiting list queues if their doctor was willing to pay.

James Westhead reports: "A quiet revolution in the doctor's surgery"

But the Conservatives say doctors are being forced into these groups against their will.

Thursday will also mark a return to free eye tests for pensioners and a 10p rise in prescription charges.

'Slash bureaucracy'

The Government says PCGs will introduce a level playing field because they will encourage co-operation.

A ministerial source said: "Today is the day that the Tory two-tier health system is consigned to history.

"Getting rid of GP fundholding means that no longer will doctor be pitted against doctor, and patient against patient.

"It means an end to the massive paper chase of fundholding which saw one fundholding doctor receive 1,000 pieces of paper per year.

BBC Health Correspondent Richard Hannaford explains how the new groups will work

"Instead of a swathe of bureaucracy, the number of bodies in primary care commissioning care will be slashed from over 3,300 to under 500."

In Wales there will be equivalent Local Health Groups and Scotland will have a different system of Local Health Care Co-operatives.

Doctors have given the scheme a cautious welcome, but fear they will have to take responsibility for local rationing decisions.

In the past, health authorities would make such decisions.

Time scale for implementation

Doctors have also complained about the short time scale for implementing the reforms, which were announced 14 months ago.

Dr John Chisholm is chairman of the British Medical Association's GPs Committee.

He said: "There have been inadequacies in funding, in pay arrangements for the PCG board members, in investment in the new information systems that will be required for strategic planning and clinical governance and inadequacies in organisational development."

Shadow Health Secretary Ann Widdecombe said: "The dragooning of family doctors into unpopular, centralised Primary Care Groups will reduce GPs abilities to concentrate on treating their patients as they have to cope with increased bureaucracy and administration.

"These unpopular collectives will cost around �50m per year - money which will be spent not on clinical services but on bureaucracy and administration.