Nearly a third of NHS trusts and primary care trusts (PCTs) are still in poor financial health, official figures show.
The Audit Commission's Review of the NHS Financial Year 2006-07 found 31% of NHS trusts and PCTs - 104 of the 335 total - are failing to meet minimum requirements on the use of resources.
However, this is an improvement on the data for the year before, when 39% showed "inadequate performance".
Nearly one in 10 of the organisations scored lowest on use of resources, but also on value for money, financial management and financial standing.
About 27% of trusts and PCTs - 91 of the total - performed well or strongly on their use of resources, up from 12% in 2005-06.
And 77% of NHS bodies balanced their finances in 2006-07, compared with 67% in 2005-06.
But the commission said it is concerned that some trusts have "little hope" of being able to get out of the red without help.
The report said: "The financial position to date in 2007-08 appears to be equally positive.
"Recent figures issued by the Department of Health show that 22 organisations are forecasting that they will fail to achieve financial balance in 2007-08, compared to 81 in 2006-07.
"The Department of Health is forecasting an aggregate surplus of £983m at the end of the financial year."
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