CANBERRA - Prime Minister Kevin Rudd has announced a sweeping overhaul of Australia's overloaded public health system in what will be one of the most important and sensitive reforms before this year's elections.

Long hospital waiting lists, overcrowded emergency departments and regular horror stories have plagued the health system for years, perpetuated by federal and state governments that blame each other for the mess.

By proposing what Canberra is labelling as the biggest reform since the 1984 overhaul of the Medicare universal healthcare system, Rudd promised to "end the blame game" by easing pressure on hospitals and boosting primary healthcare.

He also foreshadowed moves soon to train more doctors and nurses, make more hospital beds available, boost GP services and introduce personally controlled electronic health records.

The much-delayed fulfilment of his promise early in Government to force change on the states falls short of his threat of a full federal takeover of hospitals, but effectively shifts control to new, directly funded local health authorities.

Rudd has warned the states that if they try to frustrate his plans he will seek a mandate at the election through a referendum to give the federal Government "all the power it needs".

The states, which have constitutional control of their health systems, have already indicated Rudd might have a fight on his hands in a year in which state Labor governments in Victoria, South Australia and Tasmania are also heading for polls.

Western Australia's Liberal Administration has clearly stated its opposition to Rudd's reforms, joining federal Opposition warnings of damaging new layers of bureaucracy and drawing parallels with the Government's disastrous home insulation scheme.

"We've seen a ... Government which couldn't even get roof batts into people's ceiling spaces, and they want us to trust our kids and our parents in a hospital system that they run," WA Treasurer Troy Buswell told ABC radio.

Federal Opposition health spokesman Peter Dutton said Rudd's plan would fail, after two years of continued blow-outs in hospital waiting lists despite spending billions on the problem.

Rudd admitted he had received a mixed reception when he spoke to state Premiers before the public release of his plan yesterday, and said the reforms would be hammered out at a meeting of federal, state and territory leaders in Canberra next month.

He said the reforms were urgent for a system in which too many patients received unco-ordinated care because of the lack of integration between hospitals and out-of-hospital services.

"Too many of our public hospitals are struggling as demand on the system is rapidly outweighing the supply, with one in three emergency department patients, and almost one in six elective surgery patients, waiting for longer than the recommended time for treatment," Rudd said.

The present system was a total mess, with too much duplication, overlap and waste and reform must not - and would not be - put off to some distant point in the future, despite the huge scale of the undertaking.

"We do not shrink from that challenge one bit. The time for fundamental reform is now."

Under the planned reforms Canberra will take one third of the GST revenue allocated to the states - representing A$50 billion ($62.4 billion) over the forward estimates - to fund a new national health and hospital network.

This will bypass existing central bureaucracies.

Local, directly funded authorities will administer small clusters of hospitals, which will be subject to strict national performance standards and paid on the basis of each patient they treat according to scales set by a new independent body.

Rudd said local professionals with local knowledge would have the powers needed to deliver the best hospital services to their communities.

He said Canberra would also take over responsibility for all GP and primary healthcare services.

Health consumer and aged-care groups welcomed the reforms.

Robert Wells, director of the Australian National University's Menzies Centre for Health Policy, said Rudd's plans provided a bold blueprint to take Australia's health system forward.