The Government has been forced to rewrite new rules which critics claimed would lead to the "backdoor privatisation" of the NHS.
Faced with a backlash by medics, opposition from Labour and the prospect of a fresh assault on the reforms by Liberal Democrats, ministers acknowledged the regulations on competition "created confusion and generated significant concerns", and would be amended.
Labour claimed the change, just weeks before the new system created by the coalition Government's shake-up of the NHS in England comes into effect, showed the policy was in "utter chaos".
Lib Dem health minister Norman Lamb told MPs: "My department is acting quickly to improve the drafting so that there can be no doubt that the regulations go no further than the previous set of principles and rules inherited from the previous Labour government."
The Section 75 regulations follow on from the Health and Social Care Act, which was passed after lengthy battles between the Conservative and Lib Dem wings of the coalition.
Mr Lamb said the regulations governing commissioning "must be fully in line with the assurances given" to Parliament during the passage of the Act.
Under the principles of the legislation, commissioners should decide when and how competition should be used rather than regulators or ministers.
Mr Lamb said concerns had been raised that commissioners would need to tender for all services under the regulations.
Shadow health secretary Andy Burnham said: "In less than four weeks' time new GP commissioners take control, and yet there is complete confusion about the job they are being asked to do."
Medics welcomed the announcement that the Section 75 regulations would be rewritten. A spokeswoman for the Academy of Medical Royal Colleges said: "We now await the revised regulations which we trust will address the concerns we expressed and more clearly align with the assurances given by the Government during the passage of the Health and Social Care Act."