The National Health Service University, a 2001 Labour manifesto commitment designed to improve health service skills, was scrapped this week ending months of uncertainty for academics in its partner universities.
The Department of Health has announced that the NHSU is to be merged with the NHS Modernisation Agency and NHS Leadership Centre as part of a major rationalisation of quangos. The new organisation will be called the NHS Institute for Learning, Skills and Innovation - or Nilsi.
Bob Fryer, the chief executive of the NHSU, is to become national director for widening participation in learning for the NHS.
Universities UK, the vice-chancellors' umbrella group, said it welcomed the clarification about the role of the NHSU, after a protracted period of uncertainty. The NHSU had 13 university partners.
Janet Finch, chair of the UUK health committee, said: "We are glad to see that the health service remains committed to developing its staff, via the new institute, and we look forward to working with health service colleagues as they develop detailed plans."
The NHSU had caused concern in universities since it was announced, particularly over its use of the university title.
Fears that the NHSU would duplicate the work of universities were such that, shortly after the NHSU was announced, it had to sign a memorandum of understanding in which it in effect promised to steer clear of degree courses.
Sir Ian Carruthers, chief executive of Dorset Strategic Health Authority, will oversee the transition period. The new institute is expected to be up and running by July 2005. Sir Ian will be advised by a board chaired by Sir David Brown, chairman of Motorola.
The DoH said that one of Sir Ian's roles would be to "clarify the relationship with strategic partners, particularly with higher education".
Sue Bernhauser, acting chair of the Council of Deans for Nursing and Health Professions, said: "We trust the new NHS institute will work in close partnership with higher education. However, we would welcome an explicit clarification that it will act as a commissioner of education rather than a provider."
Professor Fryer said: "I have long argued that the Modernisation Agency and the NHSU should be brought together."
On the question of the NHSU name he said: "It is up to Sir Ian to decide which NHSU functions should carry on and what should happen to the title."
Professor Fryer said he would take up his new role as director for widening participation in learning in the new year. This is seen as a particular issue for medical schools.
A spokesperson for the Council of Heads of Medical Schools, said: "This is already a key area for CHMS - members have delivered a large range of innovative programmes across the country."