Hospitals will be told to halve incidents of avoidable harm to patients under a tough new safety initiative that could save 6,000 lives over the next three years.
Health Secretary Jeremy Hunt wants every hospital to join the "Sign Up To Safety" campaign and drive down medication errors, blood clots and bed sores.
He told Sky News the ambitious initiative was triggered by the shocking care standards at the Mid-Staffordshire NHS Trust, which resulted in significant harm and extra deaths.
He said: "It is my clear ambition that the NHS should become the safest healthcare system anywhere in the world.
"I want the tragic events of Mid Staffs to become a turning point in the creation of a more open, compassionate and transparent culture within the NHS.
"We now have a once in a generation opportunity to save lives and prevent avoidable harm - which will empower staff and save money that can be re-invested in patient care. "
The NHS currently pays out £1.3bn a year to patients who have suffered harm from poor care.
But hospitals that sign up to the safety initiative will be offered reductions in the indemnity premiums they are charged by the NHS Litigation Authority.
In another significant move the Department of Health confirmed it is to bring in a duty of candour for NHS staff, forcing them to admit to mistakes.
A consultation will be held on where to set the threshold of harm that will trigger action.
The Royal United Hospital in Bath has already dramatically improved patient safety as part of a five-year initiative across the south west of England.
Harmful incidents have been halved and hospital mortality has been cut by a fifth.
Professor Carol Peden, who has led the programme at the hospital, said staff now identify patients with dementia, MRSA and nutritional needs.
And they also pay extra attention to those at risk of skin ulcers and falls.
She said: "It's about understanding that it's doing the simple, important things well, reliably.
"And when you do that right, then it builds into better healthcare and better outcomes for patients."
Jill Rogers, who was admitted to the hospital with a chest infection two weeks ago, said she was reassured by the focus on safety.
"They are very careful with hygiene. They're always wiping down tables.
"And then there's all the attention you get. The doctors come round and explain everything to you."