The Government has been accused of performing a U-turn over private sector involvement in the NHS.
Health Secretary Alan Johnson denied there had been a change in policy despite cancelling a number of schemes.
Mr Johnson said health officials had recommended terminating the contract of one provider and dropping six other schemes which were "unlikely to provide value for money".
However, in a Commons written statement he insisted that the independent sector would play an "increased role" where it was needed.
Tories said the move was an admission of "incompetence and failure" in the Department of Health's procurement process.
Mr Johnson did give the green light to three projects with a combined value of approximately £200 million that are expected to provide 19,600 diagnostic scans and 123,000 kidney dialysis sessions per year. A further seven schemes are being considered, with a final decision due by the end of March next year.
Mr Johnson said: "The reduction in the overall size of the procurement does not represent a change in policy. As I have stated before, we will continue to use the independent sector."
But he said the Government will now move towards greater local procurement of services with a new Independent Sector Procurement Forum to allow representatives of private firms and charities to advise on policies and practices.
The schemes which will be dropped are: North East Yorkshire and North Lincolnshire Referral Assessment Diagnostics and Treatment Service; North East Diagnostics; South East Diagnostics; Norfolk, Suffolk and Cambridge Electives; Cumbria and Lancashire Clinical Assessment and Treatment Service; Hampshire and Isle of Wight Electives.
The director general of the commercial directorate had also advised that the contract with Care UK for diagnostic services in the West Midlands should be terminated because it only had a 5% uptake rate.
