Gagging clauses stopping departing NHS staff speaking out about patient safety or care have been banned by the Government.
Hundreds of whistleblowers have been silenced by the clauses in severance packages to stop them highlighting facts that will embarrass hospitals.
Jeremy Hunt wants greater openness But Health Secretary Jeremy Hunt said the practice would end with immediate effect to help create a culture of "openness and transparency" across the NHS.
Staff leaving the health service will instead have a new legal right that allows them to speak out about issues in the public interest, such as death rates or poor care.
The move comes in the wake of the Mid Staffordshire scandal, in which hundreds of patients are believed to have died because of poor care.
Mr Hunt said: "The era of gagging NHS staff from raising their real worries about patient care must come to an end.
"I've already been clear with the NHS that this is illegal - but now the NHS will get a clear message that they won't even get these agreements signed off unless and until they are clear with staff about their legal right to blow the whistle."
He has already written to every NHS Trust to make clear he believes gagging clauses are illegal and not in the spirit of the health service.
The Treasury and the Department of Health have to sign off compromise agreements when staff leave to make sure they are value for money for the taxpayer.
The move follows the scandal in Mid-Staffordshire The change will mean that in future only contracts including a specific clause that states employees are not blocked from whistleblowing will be given the go ahead.
Almost £15m was reportedly spent on compromise agreements for NHS staff over three years, of which 90% contained clauses to stop staff speaking out.
The approach has been highlighted by the case of Gary Walker, former chief executive of United Lincolnshire Hospitals Trust, who claimed he was sacked after raising concerns.
Mr Walker says he was paid £500,000 to keep quiet but broke his silence last month and now fears financial ruin if he is sued for breach of contract.
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