The private sector is set to provide blood tests and tissue checks for the NHS, the government has said.
Pathologists carry out a range of tests to help diagnose patients
The plan was announced as part of a review of the way pathology services are run in England.
The government announced £1m funding for 12 pilot schemes which will look at using private sector testing and utilising NHS labs more efficiently.
But the Royal College of Pathologists said the government risked the private sector "cherry-picking" services.
Pathology services include blood tests, cervical smear tests and checks on tissue samples, such as biopsies to detect cancer.
Around 70% of all diagnoses involve a pathology investigation and demand for these tests has been rising by 10% each year.
Pathology services cost the NHS around £2.5bn a year.
The 12 pilots will run until 2008/9 when the most efficient ways of working will be expanded across England.
The government has said there need to be more efficient systems so samples are tested and patients informed of results as quickly as possible.
The plans were announced in response to a review of pathology services in England by Lord Carter of Coles.
He found that services are fragmented - with some areas using small in-house laboratories and others having larger networks.
Professor Peter Furness, vice-president of the Royal College of Pathologists welcomed Lord Carter's report, and its emphasis on looking at more efficient and effective ways of using NHS services.
And he welcomed the report's caution about increasing the use of the private sector.
But he said: "The government's response is far more bullish, and raises the prospect of exactly the sort of cherry-picking of the 'easiest bits', such as blood tests, that could destabilise and fragment the service in the way that Lord Carter's report warns about."
A spokeswoman for the British Medical Association said any private sector involvement must only take place where the NHS did not have sufficient capacity and was not making progress in meeting local needs.
Announcing the reforms, health minister Lord Warner said: "The review has confirmed we need to improve efficiency and provide better, more convenient and speedier services for patients.
"There are clearly issues to be tackled in terms of improving transportation of samples and notifying patients of results.
"We need to explore, as other countries have done, what lessons there are to be learned from the independent sector, particularly in providing routine tests.
"We need to look for substantial efficiency gains through new ways of working."
Lord Carter of Coles said: "We believe there is a need for a much more integrated pathology service to improve both its quality and status within the NHS, and its responsiveness to patients."
Doris-Ann Williams, director general of trade organisation the British In Vitro Diagnostics Association which represents companies which provide testing services, said: "Like much of the NHS, the pathology service has suffered from years of neglect.
"We have lobbied for change, and our recommendations, endorsed in this report, represent a big step forward for patient care."
Shadow Health Minister Andrew Murrison said: "This government has a track record of failing to get the best deal for the taxpayer when contracting out services to the independent sector.
"We want assurances that the same standards that apply in the NHS will apply to work that is contracted out."
The pilot sites will be at Northumberland Tyne and Wear NHS Trust, Barts and the London NHS Trust, Kings College Hospital NHS Trust, Luton and Dunstable Hospital NHS Trust, North Cumbria Acute Hospitals NHS Trust, Royal Devon and Exeter NHS Foundation Trust, University Hospital Birmingham NHS Foundation Trust, Leeds Teaching Hospitals NHS Trust, Northern Lincolnshire and Goole NHS Trust with United Lincolnshire Hospitals NHS Trust, Yorkshire and The Humber and East Midlands Strategic Health Authority, Derby Hospitals NHS Foundation Trust, Frimley Park and Royal Surrey County.