The private sector will carry our scans for the NHS

The money, allocated over the next five years, will fund checks such blood tests, MRI scans, ultrasounds and endoscopies.

NHS diagnostic services are also being expanded.

The increase is aimed at ensuring the government meets its 2008 target of no more than 18 week waits between seeing a GP and hospital treatment.

Private sector providers will be invited to bid for the diagnostic test contracts over the coming weeks.

Health Secretary John Reid said the total number of scans would go up 40% by 2007/8 - to 8.9 million a year - one million of them in the private sector.

We have heard of MRI scanners in NHS hospitals sitting unused while patients are scanned elsewhere Dr Jacky Davies, British Medical Association

Mr Reid said: "By the end of 2008, we are determined no one will wait longer than 18 weeks for hospital treatment from the time they see their GP right through to the time of their treatment.

"To achieve this we must expand our diagnostic service capacity rapidly."

He added: "We are going to change that. We know that many patients are caught in a bottleneck of waiting for a scan or other diagnostic service before they are referred for an operation.

"This can be a worrying and uncertain time; to them it is very much part of the time they have to wait."

'Pay the NHS'

He defended the use of the private sector, pointing out that other contracted out services had proved popular with patients.

"Expanding capacity in this way allows the local NHS to quickly tap into good value, high-quality clinical resources and ensure patients are treated in state-of-the-art facilities.

"In buying extra capacity from the independent sector we will significantly increase the NHS funded diagnostic provision and increase the numbers of expert staff such as radiologists to provide these services for NHS patients, with equal access free at the point of delivery."

Dr Jacky Davies. a member of the British Medical Association's Consultants' Committee said: "It is obviously good news if patients do not have to wait so long for either their diagnostic tests or their operations.

"However, the BMA questions why this money cannot be directed to the NHS. We have heard of MRI scanners in NHS hospitals sitting unused while patients are scanned elsewhere.

"Hospitals will not be able to survive if their workload is taken away.

"So far the outsourcing of imaging services has not been value for money and patient care has suffered."

Shadow Health Secretary Andrew Lansley said the government should also offer the NHS to bid for the funds.

He added: "Scanners are sitting unused across Britain because lack of trained staff to utilise them.

"But instead of providing funds for training and retaining radiographers, Labour has delivered another faulty initiative, designed to grab headlines in the run up to an election."

Last summer, the government completed a deal with Alliance Medical to provide 120,000 scans in mobile MRI scanners.

Liberal Democrat health spokesman Paul Burstow said: "There are serious doubts about the value for money Ministers will achieve with these contracts.

"Offering a contract in such an important area without consulting with the frontline staff concerned is a recipe for bungled implementation and wasted taxpayers' money."