Local health bodies are to undergo a shake-up, the government says.
PCTs are to be cut from 303 to 152
The 303 primary care trusts in England which are in charge of commissioning local health services are to be merged into 152 larger trusts.
The government, which is also reducing the number of ambulance trusts, said the move will save £250m and lead to better working with social services.
But opposition parties said the changes had not been properly planned for and would lead to instability in the NHS.
PCTs control three-quarters of the NHS budget and buy hospital, GP and community health services for their local population.
The new arrangements, which come into force in October, will bring over 70% of PCTs in line with council social services boundaries.
At the moment, under half of PCTs and social service boundaries line up.
The government also believes it will strengthen the PCT commissioning role by giving them greater purchasing power as well as saving money through administration costs.
Ambulance trusts will be cut from 29 to 12 from July - a move which ministers said should lead to better emergency planning and preparedness.
The government first announced it would overhaul the structure of the NHS last year, but the latest announcement clarifies the final set up. It is possible some staff may lose their jobs through the restructuring.
Health Secretary Patricia Hewitt said: "The new PCTs will be better organised to commission services that best suit the needs of their local population."
But opposition parties attacked the moves. Shadow Health Minister Stephen O'Brien said it was "change for changes sake", pointing out PCTs were only set up four years ago.
He said it would affect staff morale and patient services and cost £320m to introduce.
And Liberal Democrat health spokeswoman Steve Webb said rural communities were concerned they could be marginalised as larger bodies may be tempted to focus on urban areas.
Niall Dickson, of the independent think tank the King's Fund, said he was not convinced that a complete reorganisation of the health service at such a crucial time was the right thing to do.
He said: "Today's announcement should lead to strengthened management within PCTs. And the move to match PCT and local authority boundaries is welcome.
"The big question is whether or not these structural changes will deliver the £250 million of cost savings that the government has promised."
Gill Morgan, chief executive of the NHS Confederation, which represents health service managers, said staff would be working proactively with the process.
"Now that the announcement has been made about the number of new primary care and ambulance trusts we can move on. The next task is to build the teams in the new organisations.
"We must make sure that patient care is at the heart of the whole process and that staff are treated fairly through this difficult time."
And Unison said: "We reiterate that the review must not be used as a smoke screen for job or cost cutting."