Steps began today to place the trust which runs scandal-hit Stafford Hospital into special administration.
Health watchdog Monitor has started the procedure in a bid to "safeguard services" for patients.
A decision has been taken in principle by Monitor's board following a recommendations from experts who carried out a review of Mid Staffordshire NHS Trust finances five months ago. They found the hospital was "financially and clinically unsustainable" in its current form in the long term.
Consultation is now taking place over whether to put the hospital trust into special administration, which would be a first in the country.
David Bennett, chief executive of Monitor, said: "We are now consulting on whether to appoint trust special administrators with the expertise to reorganise services in a way which is clinically robust and sustainable.
"Their priority will be to make sure that patients can continue to access the services that they need and will work with the local community to do this."
Mr Bennett said taking into account the consultation process and approval, it would be several weeks before trust special administrators were put in place.
"In the meantime, the trust board will continue to ensure the current range of services are delivered for patients and trust special administrators would then continue that responsibility," he added.
If appointed, trust special administrators would take over the running of the trust and would work with commissioners and other local healthwatch organisations to produce a final plan for the delivery and reorganisation of health services. This would then be put out to the public to have their say.
Consultation is also taking place with the health secretary Jeremy Hunt, who would have to give final approval, and other key organisations.
A full report from the Contingency Planning Team, which started its review of the hospital's finances last year, is being finalised and is expected to be published shortly.
Mid Staffordshire NHS Foundation Trust said today's announcement from Monitor was a significant step.
Professor John Caldwell, chairman of the trust, said: "The prime concern of the present board has been to ensure the delivery of safe and sustainable services of high quality to the communities served by our hospitals at Cannock and Stafford.
"We have accepted for some time that Mid Staffordshire Foundation Trust working alone cannot produce a long lasting solution to the issues we face to ensure financial and clinical sustainability.
"We will continue to work with our regulators and commissioners to deliver the services they require to our local community.”
It comes after the national scandal at Stafford Hospital that saw hundreds of patients needlessly die amid appalling conditions and care.Subscribe to our Newsletter