The health secretary, Andrew Lansley, has let slip that the government is planning to scrap NHS Direct, the hugely popular medical telephone helpline.

While touring Basingstoke and North Hampshire hospital on Thursday, he revealed that the phone service – which this year cost £123m to run – is to be axed.

Until Lansley's apparent indiscretion, the official government line was that a new free telephone service, NHS 111, would not replace existing local telephone services or NHS Direct but might do so in the longer term if a pilot scheme is successful.

The Department of Health has confirmed that NHS 111 would replace NHS Direct within three years. The new service is undergoing trials in County Durham and Darlington.

"When NHS 111 is rolled out nationally, it will replace the NHS Direct 0845 4647 telephone number," the department said yesterday. People can dial 111 to get health advice and information about out-of-hours GPs, walk-in centres, emergency dentists and 24-hour chemists.

Although the new number is free, it is expected to be far cheaper to run than NHS Direct because it is likely to employ fewer medically trained staff. The department said it did not know how much NHS 111 would cost but admitted that it had a responsibility to save money.

"It is important that we deliver the best possible service for the public and, in the economic climate, deliver the best value for money," said a spokeswoman.

The NHS has been told to find up to £20bn of savings by 2014, even though the health service is due to see rises in its budget in the coming years. This is because of the increasing demands from an ageing population, new drugs and lifestyle changes such as increasing obesity.

One way to cut costs is to hire cheaper staff. Forty per cent of NHS Direct's staff are trained nurses, but anyone dialling 111 will speak to non-specialist "call advisers" who have completed a 60-hour course rather than a degree. The course, which is the same as that taken by 999 call operators, includes "specific education around anatomy, physiology and clinical features of injury and illness to enable them to provide a high-quality assessment of symptoms," said the health department spokeswoman. She added that difficult calls will be referred to a doctor or clinical supervisor.

In the pilot scheme, there is only one nurse on duty at each of the two call centres taking 111 calls, according to Mark Cotton, spokesman for the North East Ambulance Service, which is running the trial. At weekends, when the service is busiest, there are 25 call operators to a shift at each centre, but still just one nurse for referrals. Later this year, three more pilot schemes will begin, in Nottingham, Lincolnshire and Luton.

In June, GPs urged the government to scrap NHS Direct because it was a waste of money that did not deliver its objectives. It was set up in 1998 to ease the pressure on accident and emergency wards and GP surgeries, but freedom of information figures released to the medical magazine Pulse earlier this year showed that 12% of callers were sent to A&E or put in an ambulance, and 22% were sent to their GP as urgent or next-day cases. NHS Direct handles more than 27,000 calls a day.

Earlier this summer, Lansley got into trouble for criticising Jamie Oliver's school dinner programme, saying that "lecturing" people to eat healthily was "counterintuitive".

Last year, while in the shadow cabinet, he embarrassed the Tory party by declaring that a Conservative government would cut 10% from all Whitehall departments – at a time when the party had not revealed its spending plans.