The ailing National Programme for IT has been cancelled, although most of its multi-billion pound spending will go ahead.
A statement from the Department of Health said a shift to more local procurement would work better, "whilst continuing with national applications already procured".
The programme should aim to "connect all" rather than "replace all". The £12.7bn project has been dogged by delays and controversy - most recently over patient approval for Summary Care Records. The cuts equate to savings of £700m, alongside £600m in cutbacks announced by the previous government.
Health Minister Simon Burns said improving NHS technology was important, “but the nationally imposed system is neither necessary nor appropriate to deliver this. We will allow hospitals to use and develop the IT they already have and add to their environment either by integrating systems purchased through the existing national contracts or elsewhere."
Parts of the scheme like Choose and Book, Electronic Prescription Services and PACS - the system for exchanging and storing X-rays and other images - will be retained.
The review is still considering the future of the Summary Care Record project, already condemned by the British Medical Association.
An earlier review of SCR by University College London found the data was not trusted by doctors and had no impact on patient safety. ®