Successful hospitals are to be freed from Government control under radical new plans outlined by Health Secretary Alan Milburn today.

And the running of badly-performing hospitals will be put out to tender, with bids invited from top-performing trusts, the private sector or charities.

The future of each hospital will depend on the number of stars it gains under the Government's rating system.

The two hospital trusts in Mid Sussex were each awarded one star, giving cause for concern.

If a trust's rating drops to zero it will risk being taken over.

Mid Sussex NHS Trust, which runs the Princess Royal Hospital in Haywards Heath, is due to merge with Brighton Health Care NHS Trust in April.

Brighton received a zero star rating, making it one of the poorest performing trusts in England.

Chief executive Stuart Welling was given three months to turn the trust's performance around and warned it could be taken over by a new management team from a successful trust.

He will find out soon whether he has managed to save his job.

If Mr Welling is forced out and the new team manages to bring the trust up to scratch and earn three stars, it could eventually opt out of Whitehall control.

Surrey and Sussex Healthcare NHS Trust, which runs Crawley Hospital, will also have to improve its performance from a one-star rating if it is to avoid being taken over.

The trust has already set up an agreement with a private Bupa hospital in Redhill to treat some of its patients to cut down on waiting list times.

Mr Milburn wants to allow good managers greater autonomy within the NHS to create "foundation hospitals".

Managers of three-star hospitals will get the opportunity to set up not-for-profit companies to run their trusts free from government interference.

Although they would continue to be part of the NHS and subjected to national standards and external inspections, managers would otherwise be given independence in all other areas, including staff pay and conditions.

Mr Milburn said the NHS was Britain's "last great nationalised industry" in which patients were expected to be grateful for what they received.

He said: "That model is untenable for the 21st century. The NHS has to grow up and be part of this century rather than the last.

"The job of government should not be to run the system but to oversee it. We want greater community ownership and less state ownership, leading to greater diversity and plurality in local services.

"We now have a clear set of frameworks and standards in place. It is time to let go."

Mr Milburn said the idea came from the chief executives of the best hospitals, who told him that they wanted greater freedom.

Draft proposals are expected to be published within three months.

Dave Prentis, general secretary of Unison, dismissed Mr Milburn's plans.

He said: "What is needed is more money and investment going into the NHS and the staff who provide the services.

"The Health Secretary talks about freedom for managers. What does that freedom mean? Is it freedom to double their salaries at the patients' expense; freedom to drive down the pay and conditions of staff?"

Bob Abberley, assistant general secretary of Unison, said the proposals put forward by Mr Milburn were not in the NHS plan.

He said: "The hospitals Mr Milburn is talking about giving freedoms to have become successful under the NHS.

"Where is the evidence that this will improve patient care?"

Tory health spokesman Oliver Heald accused Mr Milburn of panic.

He said: "The NHS is overwhelmed at the moment. This seems to me to be a back of an envelope job."

A code of conduct is being launched to stop managers responsible for "massaging" hospital waiting list figures walking into new NHS jobs.

A National Audit Office report recently showed nine NHS trusts were involved in "inappropriate adjustment" of lists.