Patients are to be offered payouts on a new scale of fixed tariffs for specific injuries by the NHS under sweeping changes to cut the spiralling cost of compensation claims for medical mishaps.

Doctors and patients want a slimmed-down system to speed up claims and curb the "blame culture" but it is likely the new system will still leave some patients protesting about the amounts they are awarded.

The move to be unveiled in a White Paper on medical negligence this week by Health Secretary Alan Milburn will be followed by legislation later in this Parliament. The need for action has been prompted by the growing alarm at the rising numbers of claims for compensation, spurred on by law firms advertising no-win, no-fee services.

The National Audit Office estimated in a report in May that Britain could be facing a bill of £3.9bn in legal costs for claims. That would dwarf the size of the payouts from the NHS which currently total some £400m a year.

"The system has become a racket rather than a remedy," said a ministerial source. The size of the tariffs will be negotiated later but it comes close to the no-fault compensation system which patients' groups have been demanding for years.

The White Paper will call for greater openness among doctors and nurses so that faulty systems can be changed before they result in medical accidents. By speeding up the system of payments, ministers are hoping to reduce the distress for patients and doctors charged with negligence.

It is being published ahead of the final report into the Bristol baby scandal, which will condemn doctors for failures in procedures. The report, which landed on Mr Milburn's desk last week, covered 96 days of hearings, 238 statements by parents, and over 42,000 documents; it is as big as the BSE inquiry, and is said to be "hard-hitting".

Mr Milburn fears it will lead to renewed complaints of ministerial "doctor bashing" by the medical profession. He met the heads of the royal colleges a week ago to prepare the ground but was savaged by British Medical Association leaders at a conference.

The inquiry, chaired by Professor Ian Kennedy, head of health law at University College, London, was ordered in 1998 by former health secretary Frank Dobson to look into the high level of deaths of babies undergoing heart surgery at Bristol Royal Infirmary between 1984 and 1995.

It uncovered a second scandal of how doctors had routinely engaged in "organ harvesting" of dead babies and children at Bristol and the children's hospital at Alder Hey on Merseyside without full parental consent.

The interim Bristol inquiry report accused doctors of "arrogance". One of the heart surgeons, Janardan Dhasmana, 61, was banned from operating on children, and had the ban extended for a further year in June. A separate report into the Alder Hey case by Michael Redfern QC led to disciplinary action against a rogue Dutch pathologist, Dick van Velzen.