Health Secretary Jeremy Hunt has backed calls to dissolve the trust that runs the scandal-hit Stafford Hospital.
Mr Hunt said Mid Staffordshire NHS Trust would be scrapped, with services moved to other hospitals.
The trust has been in administration since April when services were deemed "unsustainable" by the health watchdog Monitor.
However, campaigners who oppose the move have pledged to challenge the decision in the courts.
Administration is a pretty brutal and - for the NHS - quick process. In years gone by, troubled trusts would have limped on regardless.
But the landscape has changed. With the health service under pressure to be as efficient as possible, there is now a growing acceptance that action is needed to deal with unsustainable trusts.
And so, less than a year after this process was started, the health secretary has signed off the dismantling of this trust.
Mid Staffordshire, like many small trusts, has struggled to attract staff and patients. But its financial viability has also been hit by the scandal over poor care from 2005 to 2009.
However, this is only the second time the process has been used in the health service. The first was in 2012 when administrators went into South London Healthcare. That ended with one of the key elements of the plans - the downgrading of Lewisham Hospital - being overturned in court.
NHS bosses are confident this will be a much more straightforward process from now on by comparison - unlike in south London other trusts are not losing services.
That will no doubt elicit mixed emotions in the town with a number of locals unhappy at what they see as the demonisation of their hospital trust despite the scale of the scandal that has engulfed it. But for the rest of the health service it will act as a shot across the bows.
Mr Hunt said the changes would "secure the safe and high-quality services that the people of Stafford deserve having endured years of uncertainty and failures in care".
He added: "I want Stafford to be a proper district hospital that continues to meet the needs of patients nearby, including for emergency care and births."
He said he wanted to dissolve the trust "as soon as possible" to stabilise local health services.
Under today's announcement, the Mid Staffordshire NHS Foundation Trust will be dissolved while Stafford and Cannock Chase Hospitals will be "operated by other local providers".
Stafford could still retain consultant-led maternity services after Mr Hunt agreed to NHS England carrying out a review into the issue.
The original plan from administrators had been for maternity services to close, but this was later amended to allow for the creation of a midwife-led unit.
Mr Hunt has now agreed to review that decision to see whether consultant-led services - needed for more difficult births - should be retained.
The trust was criticised in February 2013 in a public inquiry headed by Robert Francis QC for causing the "suffering of hundreds of people" under its care between 2005 and 2008.
The inquiry made 290 recommendations aimed at tackling the wider cultural problems in the NHS.
Sue Hawkins, from the Save Stafford Hospital group, said: "We were expecting the trust to dissolve.
"We understood from the outset that would be the case, but we are a semi-rural area and people are going to have to travel long distances to receive care.
"It's been a very lengthy process. I wouldn't wish this on any other hospital."
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