The Government is set to launch a crackdown on the number of NHS patients in England who have to wait for an extended period of time to receive treatment.
The current target time for hospitals to see non-urgent patients is 18 weeks, but ministers are concerned that there is no incentive to treat people once that period has elapsed.
It was reported that 250,000 people are still waiting for treatment after the target was missed in their cases.
A spokesman for the Department of Health confirmed that the initiative was in place but said full details would be announced later today.
Health Secretary Andrew Lansley said targets created by the Labour government had created "hidden waiting lists".
He told the BBC: "Because of Labour's perverse approach, the NHS actually had an incentive not to treat patients.
"The new approach we will take from next year will clamp down on this practice. We will reduce the number of patients on hidden waiting lists, ensuring everyone gets access to the treatment they need."
Mr Lansley told the BBC Radio 4 Today programme: "Patients should have a right to expect from the point at which they are referred by the GP they should get treatment within 18 weeks. That is what is in the constitution.
"The way unfortunately the target has worked over recent years has been to mean that the only thing being measured has been the point at which people who have been treated are treated, and if you reach 18 weeks and you haven't been treated, from the hospital's point of view you fall out completely from the process of measuring. So there is no incentive for the hospitals to do that. So I'm going to bring that back into performance management.
"With my colleagues at the Department of Health we are going to...bring down the numbers - and it's been about a quarter of a million for over two years and we need to bring it down.
"It represents 10% of the total stock of people waiting at the moment. We are going to start bringing it down from 10% progressively over time.
"If we bring it in to this system of making sure that patients' interests are part of the contractual arrangements with hospitals - in the same way at the moment they have a contractual requirement within 18 weeks, then the operational standard is 90% of patients should be seen and treated within 18 weeks if they are admitted to hospital and 95% if they are not - then what we need to do is extend the same kind of contractual provision to this additional set of patients.
"What it means under the contract is if we set a figure at 92%, for example, if they go beyond that and fail to meet that, for every 1% they fail to meet that they could under the contract lose 0.5% of their elective contract value."
Mr Lansley said his goal was to ensure that across the NHS resources were better used. He said efforts were being made to reduce the volume of growth in the system to create "capacity" in the NHS to deal with people who have been waiting for so long.
Government figures show that the proportion of patients still waiting after 18 weeks is subject to fluctuations, but hovers around 10% of all those waiting for treatment.
In September, 242,540 people had been waiting longer than 18 weeks for treatment.
NHS trusts with the largest volume of patients waiting more than a year include St George's Healthcare NHS Trust in London (5,076 in September), Kingston Hospital NHS Trust in Surrey (2,968), Royal United Hospital Bath NHS Trust (1,447), Sheffield Teaching Hospitals NHS Foundation Trust (1,162) and South London Healthcare NHS Trust (1,018).
Katherine Murphy, chief executive of the Patients Association, said: "For months we have said again and again that the number of people waiting for longer than 18 weeks was increasing and the Department of Health insisted that waiting times were stable.
"Now finally they have realised that urgent action is needed to stop this downward spiral.
"It is outrageous that a quarter of a million patients have been waiting for longer than 18 weeks.
"Patients have a right under the NHS Constitution to be treated within 18 weeks and the Prime Minister gave his personal pledge to uphold this right.
"That was five months ago and only now have the Department of Health recognised the problem.
"We do not want to go back to targets and perverse incentives but equally we do not want to go back to patients languishing interminably on waiting lists."
NHS Confederation deputy policy director Jo Webber said: "We absolutely support the right of patients to be seen as quickly as possible.
"The NHS is working flat out to keep waiting as low as possible whilst under unprecedented financial pressure.
"We must recognise that there are lots of reasons why patients have to wait longer than 18 weeks. For example, some patients may need to lose weight before they can safely be operated on.
"It is really important we make sure people do not wait too long for treatment.
"We welcome what the Government is trying to do with this new target.
"This indicator will shine a spotlight on one of the many aspects of patient waiting the Government does not currently measure."
Christina McAnea, Unison head of health, said: "Patients should not have to wait in pain and unnecessarily for an operation.
"However, the bottom line is - is there going to be any new money to fund these measures or will hospitals have to make cuts to services elsewhere?
"Many trusts are struggling financially because of the Government's lack of funding and this added pressure has led to the increased waiting times as well as the rationing of treatments."