Junior Health Minister John Hutton confirmed in a Commons written reply that proposals to replace the current three zone structure of the service with a single integrated system had been approved by ministers.

In addition, a new position of Blood Centre Head will be created to co-ordinate local services.

Mr Hutton said the plan, submitted by the National Blood Authority (NBA) the body that oversees the service, would "ensure a first class future" for the service.

The junior minister said that the NBS had been working to improve the quality of the service provided to blood donors, clinicians and patients.

"But to achieve lasting improvement, it also needs to modernise the management of the service, both nationally and locally and to develop a clear strategic direction within which all parts of the service can operate," he said.

Mr Hutton said the creation of a single integrated structure would be a great step forward.

He said: "This will improve the performance of the service by creating a greater sense of strategic direction, shared ownership of priorities with the wider NHS and clearer accountabilities."

Damning report

NBA head Sir Colin Walker was sacked in April 1998 following a damning report into the workings of the service.

The review, carried out by Professor John Cash, ex-president of the Royal College of Physicians of Edinburgh and former director of the Scottish National Blood Transfusion Service, outlined a serious breakdown of trust between the NBA and many local people and clinicians in Liverpool.

Sir Colin and his chief executive, John Adey, were responsible for changes to the NBA which infuriated staff and were condemned as a failure.

There has been a shortage of blood supplies

In October 1997, NBA bosses were criticised when hospitals across the country reported a shortage of blood supplies. Just two months earlier, it had launched a �1m campaign to attract new donors.

Professor Cash's report contained criticism of the way changes and cuts were conceived and carried through.

The NBA was established in 1993, charged with making the system more efficient.

The reorganisation of regional blood centres saw the 13 collection banks downgraded but kept open with processing, testing and administration transferred to only three centres in London, Bristol and Leeds.

The system for collecting blood donations has also attracted criticism from doctors.

Writing in the British Medical Journal last year, consultant haematologist Dr Frank Booth, from Torbay Hospital, said the system for collecting blood donations was in need of a major overhaul.

Mr Booth said: "Collection of blood from volunteers in the UK still takes place predominantly in church halls and community centres ... and sees fleets of pantechnicons trundling miles across the countryside."

He criticised the productivity of a service which is constantly struggling to meet the demand for blood from hospitals, and said the collecting teams rarely work at weekends and have a productive working day lasting just four hours.

About 2.5 million units of blood are collected in the UK each year. English hospitals alone use 10,000 units everyday.