Emergency admissions will be covered by the scheme

Payment by results, whereby trusts are paid per patient treated, is set to kick in for much of the NHS in April.

The consultation paper sets out how tariffs will be set, trusts should work together and payments will be made.

The NHS Confederation said hospitals were ready for the changes, but the government had to be flexible.

Payment by results has already started being implemented for elective operations and accounts for a third of hospital income.

But from next April it will be rolled out for A&E, outpatient treatment and emergency surgery. Community care and mental health services will follow by 2009.

The government must expect that there will be some demands for flexibility and adaptability Nigel Edwards, of the NHS Confederation Q&A: NHS reforms

It will mean NHS providers are rewarded for the number of patients they treat with a national tariff for each treatment.

In the past hospitals and other NHS bodies have been given lump sums by local health bosses to treat patients through the course of the year.

The proposed code of conduct stresses the importance of collaboration, efficiency and transparency required of NHS trusts.

In particular it said they should be open about the capacity and quality of their services to help patients decide where they want to be treated.

Health Minister Lord Warner said the system will deliver "real benefits" for patients by driving up quality.

"This code of conduct should play a part in creating a fair and transparent system, that rewards organisations for good performance and ensures the patient comes first."

Nigel Edwards, director of policy at the NHS Confederation, which represents health managers, said: "The NHS is ready. A lot of work has gone in to make sure all the correct systems are in place.

"But the government must expect that there will be some demands for flexibility and adaptability as it is rolled out.

"It is a radical programme and the way it works cannot be set."