THREE North-East hospitals have moved a step closer in their quest for foundation hospitals status.

Health Secretary Alan Milburn announced 29 candidates to become the first wave of Foundation Trust hospitals in a written ministerial statement.

The 29 - which include three hospitals trusts in the region - have been successful in their preliminary applications. They now have to pass further tests before becoming flagships for the new policy, which is going through its parliamentary stages.

The North-East trusts which have expressed an interest in becoming foundation hospitals are Newcastle Hospitals, North Tees and Hartlepool and Sunderland.

Mr Milburn told MPs in his statement: ''These NHS trusts will now enter the preparatory stage for NHS Foundation Trust status.

''The applicant NHS trusts must satisfy the requirements of the preparatory phase and must retain three stars in the performance ratings to be published in the summer before they can be approved to become NHS Foundation Trusts.

''The objective of the full application process is to help applicants prepare for NHS Foundation Trust status, check whether the applicant's vision to utilise the freedoms of NHS Foundation Trust status is consistent with the aims of the policy, and to test the organisation's readiness."

More than 60 Labour MPs rebelled on the second reading of the Bill.

The status gives more freedom to borrow, sell assets, and reach local pay deals.

Opponents have argued the move will create a two-tier health service, which has been vehemently denied by Mr Milburn.