The Times quoted Chief Medical Officer Sir Liam Donaldson as saying in his report titled - Medical Revalidation: Principles and Next Steps - that family doctors, hospital consultants and private practitioners will have to apply to renew their licences every five years.
The system - the first of its kind in the world - is designed to identify doctors who repeatedly make poor clinical decisions.
Inspectors will use evidence from patients' questionnaires and feedback from colleagues. Doctors "unable to remedy significant shortfalls in their standards of practice" risk being removed from the medical register, the report says.
Critics said that it would mean doctors spending less time with patients and practising "defensive medicine".
The report outlines how senior doctors will be appointed to assess the competence of GPs and hospital consultants in their area to ensure that patients' lives are not being put at risk.
The medical colleges, which represent different clinical specialties, will have to develop tests to check that doctors are keeping abreast of advances.
Trials will begin within two years.
At the moment doctors face no formal reassessments of their competence, clinical skills or performance between entering independent practice as a GP or consultant and retiring.
The proposals were produced with the General Medical Council (GMC) and the Academy of Medical Royal Colleges.
To date, the Government has only recommended to trusts that they carry out regular reviews of how doctors' skills are progressing, based on conversations with the individual concerned.
That system, according to today's report, is "patchy and not fit for re-licensing [the renewal of doctors' licences] across the country".
The new regime will make annual reviews mandatory. They will cover the full range of performance factors, including prescribing habits, interaction with patients and personal problems such as alcohol or drug misuse.
Appraisals will be considered a "continuing process" leading up to licences being reissued every five years. Medical students and those who work in short-term appointments or as locums will also face annual checks.
The report emphasises that the system will be "focused on raising standards, not a disciplinary mechanism to deal with the small proportion of doctors who may cause concern". he Department of Health denied that the processes would lead to extra bureaucracy. It said that in the best NHS organisations medical directors were already performing the role of responsible officers.