From 1 April the functions of NHSIA will be split between the National Programme for IT, which became an executive agency, and the newly formed Health and Social Care Information Centre (HSCIC).
The changes will also see the closure of the NHS Modernisation Agency, which is due to be dissolved by 31 July 2005. Some of its functions will be taken on by the new NHS Institute for Learning, Skills and Innovation.
In a statement setting out the ALB budgets for 2005/2006, health secretary John Reid said the closure of NHSIA and the transfer of its functions to HSCIC and the National Programme for IT had reduced operating costs by £40m.
Those savings were part of overall ALB savings of £150m for the NHS.
Reid said: "The resulting savings will contribute to our overall investment in NHS frontline healthcare. Taken together with growing efficiencies in services provided by ALBs to the wider NHS they place the sector on a firm footing to achieve the target of £500m savings by the end of 2007-08."