The move is part of the Department of Health's wide-ranging review of the "arm's-length bodies" in the NHS, which aims to cut bureaucracy and save £500m a year in costs. The cuts will result in a quarter of all staff across 38 NHS agencies losing their jobs by 2008.
The NHSIA has offices in Exeter and Birmingham. It will be replaced by the new Health and Social Care Information Centre. The location of this body has not been decided, said a Department of Health spokeswoman.
The Health and Social Care Information Centre will take on the statistics and information management functions of the NHSIA, and these will be used to help front-line NHS staff do their jobs said the spokeswoman.
Another executive body will be formed out of the national programme for IT, which is mainly supported out of offices in Leeds. This will be constituted for three to five years and will incorporate the IT functions of the NHSIA.