The department's commercial directorate placed an advertisement in the EU official journal inviting companies to begin "a competitive dialogue" about how they could take over the purchasing of healthcare for millions of NHS patients.
The advertisement appeared prematurely as it was supposed to appear only after ministers announced the policy next month.
Frank Dobson, the former health secretary, said: "If this is not privatisation of the health service, I don't know what is. It is about putting multinational companies in the driving seat of the NHS."
Lord Warner, the health minister, defended the policy but said he was withdrawing the advertisement to correct "a drafting error", but insisted the contracting out of NHS management would go ahead.
The advertisement asked firms to show how they could be of use to patients if they took over responsibility for buying healthcare from NHS hospitals, charities and private clinics. The plan would give private firms responsibility for deciding which treatments and services would be made available to patients - and whether NHS or private hospitals would provide them.
Under the present system, this commissioning work is handled by local NHS managers employed by primary care trusts. Under the new system, the PCTs would contract out the commissioning to big healthcare management consortiums with greater purchasing muscle.
Contenders for the contracts are likely to include big US companies such as United Health and Kaiser Permanente. They may be joined by British insurers such as Bupa and PPP and their EU rivals.