Patients will be given a choice of providers for mental health and community NHS services, the Government has announced.
The move, which opponents argue will lead to an increasingly privatised NHS, comes into force from next April and covers services worth millions of pounds.
Health Secretary Andrew Lansley said it will be "a big day for patients", who will be able to choose care from providers who meet NHS standards on quality, price and contracts.
Providers will compete to offer services and are likely to include private companies, charities and voluntary organisations, as well as the NHS.
Eight NHS areas - including musculoskeletal services for back pain, adult hearing services in the community, wheelchair services for children and talking therapies for adults - are being opened up for competition.
The concept of "any qualified provider" has caused huge controversy, with opponents saying it represents privatisation of the health service.
Mr Lansley was forced to water down some of his plans in the Health and Social Care Bill but insists choice is good for patients.
He said: "There is often confusion about these policies - a mistaken idea that competition is there for the sake of it, or to increase the independent sector's role in the NHS.
"But let's look at what this is really about... it's about real choices for people over their care, leading to better results.
Dr Hamish Meldrum, chairman of the British Medical Association (BMA), said: "We support greater choice for patients... what we would question is the assumption that increasing competition necessarily means improved choice. When competition results in market failure in the NHS, the ultimate consequence is the closure of services, and the restriction of choice for the patients who would have wished to use them."