The star rating system to appraise NHS performance is to be scrapped, it emerged last night.

The change, seen as one of Labour's more dramatic U-turns, comes after ministers have been criticised because opponents say the system is politically manipulated and fails to reflect patient care.

It is thought a new assessment scheme will not force trusts to compete with each other, according to The Times.

The star system, which has three grades based on a range of "performance indicators" such as cleanliness and waiting times, was greatly undermined after it was alleged former health secretary Alan Milburn interfered with the scheme to benefit a hospital in Tony Blair's constituency.

This week John Reid, the Secretary of State for Health, will launch a consultation paper advising abandoning all 62 targets that determine star ratings in favour of 24 broad "quality objectives".

It is believed hospitals will no longer have to meet waiting time targets. Focus is to be placed instead on quality of care and overall clinical outcomes. It is also thought hospitals will only undergo inspections when specific problems arise.

From April, the Commission for Healthcare Audit and Inspection will be in charge of assessing NHS performance. Its chairman, Professor Sir Ian Kennedy has been a critic of the star system introduced by Mr Milburn in 2001.

Health minister Lord Warner said last night: "Since its inception the system has been subject to a continuous process of review."