Hospitals have been ordered to crack down on the “unpalatable” high wages paid to temporary managers after it was revealed they earn more than £400,000 a year.
Some NHS bosses are paying stand-in staff up to £2,000 per day - double that of their permanent colleagues.
And the NHS watchdog warned that hiring temporary staff through external companies has enabled some employees to avoid paying tax on their sizable incomes.
In a letter to health chiefs, NHS Improvement revealed the average pay of stand-in staff is twice as much as full-time employees and that "this average hides many instances where the premium is much higher".
Its chief executive, Jim Mackey, wrote that the health service had "developed some bad habits" in issuing sizeable pay-outs without adequate justification.
He called for more regulation in hospitals, suggesting many of the expensive employees do not have their performance monitored and are ill-qualified for the role.
He said: "This [salary] is unacceptable when in some cases there is not enough evidence of need - or indeed that the quality of leadership being 'purchased' is of sufficient quality - to justify such high pay rates."
The letter warned that pay arrangements could be exploited by some as "a method of tax avoidance", adding: "This is deeply unpalatable to taxpayers, and to other NHS staff."
He ordered hospitals to replace expensive temporary employees with promoted hospital staff, saying: "The NHS has lots of talented and committed staff willing to take on important roles when organisations go through tough times.
"But for the sake of patients and staff, interim directors need to be demonstrably high quality.
"In other sectors, 'turnaround' is a profession and the skills and experience required for those tough jobs are recognised formally with accreditation.
"We will help providers reduce the amount of money they spend on interims and cracking down on off-payroll deals will help us get better value for money in the long run."
Mr Mackey said contractors being paid more than £750 a day would require the approval of the regulators.
The letter follows a cap on the agency fees charged for stand-in doctors and nurses.
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