Prime Minister Gordon Brown urged NHS staff to get behind Government reforms as ministers pledged to put quality at the heart of patient care.
Health Minister Lord Darzi unveiled his vision for the NHS in a long-awaited report that outlined measures to raise standards of care and give patients more choice in how and where they are treated.
It includes plans to force all hospitals to publish "quality accounts" of the care they provide in the same way they publish financial accounts.
Patients' assessments of the care they receive will also be linked to hospital funding, with hospitals offering poor care having their incomes reduced.
For an average district general hospital, around £7m to £9m a year - or 3-4% of their budget - will be dependent on factors like outcomes and patient satisfaction.
In his introduction to the report, Lord Darzi said: "For the first time, patients' own assessments of the success of their treatment and the quality of their experiences will have a direct impact on the way hospitals are funded."
Mr Brown gave a speech to NHS staff in which he spoke of his hopes for transforming the health service.
He said: "If in the last generation progress in health care was seen simply in terms of the doctor administering antibiotics, in the coming generation it will be patients, doctors and NHS staff working together to improve health and manage conditions.
"I believe that the NHS is almost uniquely well placed to deliver this transformation: one of the most trusted organisations in British society, its doctors, nurses and staff recognised by everyone as a force for good in our country."
Many of the details in the report had already been announced, including the speeding up of drug appraisals by the National Institute for Health and Clinical Excellence (Nice). Personal health budgets for people with conditions such as diabetes or multiple sclerosis will also be piloted to give patients greater control over their care.
