The hospital trust at the heart of one of the biggest scandals in the NHS' history should be dissolved, it was recommended today.
The Mid Staffordshire NHS Trust, which is expected to hit a budget deficit of £20m next year, was "clinically and financially unsustainable", administrators said.
The trust went into administration in April. A report earlier this year outlined "appalling" historic care failings at the Trust, with as many as 1,200 patients dying needlessly between 2005 and 2009.
If the proposals are approved by the health secretary Jeremy Hunt, it will become the first foundation trust to be dissolved.
The trust's hospitals, Stafford and Cannock, should remain open, but Stafford will become part of the University Hospital of North Staffordshire in Stoke-on-Trent, while Cannock will be operated by the Royal Wolverhampton NHS Trust, the administrators recommended.
Stafford Hospital should lose its maternity unit, with some critical care and emergency operations moving to Stoke-on-Trent, but the hospital's accident and emergency department should stay open, administrators said.
The proposals will now go to pubic consultation, with Mr Hunt set to make a final decision by the end of the year.
If approved, they should come into effect by 2018. Ninety-one per cent of patients could carry on using the hospitals even if the changes were brought in.
Trust Special Administrator Alan Bloom said: "We are doing this because services will become unsafe if no changes are made…As was reported, Mid Staffs is clinically and financially unsustainable going forward."
Despite the problems at the trust, local people had protested against service downgrades and there were cheers from campaigners outside Stafford Hospital when it was announced that the A&E unit should be kept open.
The Mid Staffordshire NHS Trust provided healthcare for 276,500 people.
It has struggled to recruit doctors and nurses because of its poor reputation, following the catastrophic failings outlined by Sir Robert Francis in his report earlier this year. The cost of expensive temporary staff has added to the trust's financial troubles.
However, Mike Farrar, chief executive of the NHS Confederation, indicated that other struggling trusts may have to undergo similar shake-ups.
"The NHS is under intense financial pressure and Mid Staffordshire NHS Foundation Trust is not alone in its predicament. We have some really tough choices to make and we need to be honest and open about what these involve," he said.
A spokesman for the Department of Health said it would carefully consider the recommendations once the public consultation over Mid Staffs was complete.