Health Secretary Alan Johnson has denied performing a U-turn over the use of private sector treatment in the NHS despite cancelling a number of schemes.
The contract of one provider is being terminated and six other schemes are being dropped as they are "unlikely to provide value for money".
But in a written statement to the Commons, Mr Johnson said the independent sector will play an "increased role" where it is needed.
He also approved three projects worth a total of £200m that are expected to provide 19,600 diagnostic scans and 123,000 kidney dialysis sessions each 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.
"However, as I said to the Health Select Committee, we will now move towards greater local procurement of services."
The schemes being 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 has also advised the contract with Care UK for diagnostic services in the West Midlands should be terminated because of "an unacceptable low rate of use".