CANBERRA - Australian Prime Minister Julia Gillard on Friday proposed a new public hospitals deal, which will see the federal government pay 50 percent of the rising cost of healthcare.

Gillard on Friday introduce the new deal scrapping her predecessor Kevin Rudd's plan to fund 60 percent of new hospital capital costs, which in return demand for states to contribute a third of their goods and services tax (GST) revenue.

Gillard will take the new approach to the The Council of Australian Governments (COAG) meeting on Sunday.

"The federal government is prepared to contribute half of the costs of growth in public hospitals," Gillard told Parliament in Canberra on Friday.

"That is, we will contribute 50 cents ($50.1 cents) for every new dollar that is needed for public hospitals."

The federal government's move to pay 50 percent of the growth in health costs would be done in two stages, with a rise to 45 percent in 2014-15, and to 50 percent by 2017-18.

Gillard said states and territories would benefit by $16.43 billion over the next 10 years from the 50-50 funding deal.

However, the States would still have to put their share of funding into a national pool that would be administered by the Commonwealth under a new Independent body.

And Gillard said under the new national pool, people will be able to see very clearly money in, money out from the federal government and state and territory governments.

The national poll will also set efficient price for procedures on which funding to the States would be based.

"That pricing of hospital services will help us identify under- performing hospitals, it will help us identify best-performing hospitals," Gillard said, adding that under-performance could be remedied and best practice shared.

The State would also have to meet new national standards for patient care.

Meanwhile, Opposition Leader Tony Abbott said Friday's change is a sign the Government is abandoning hospital reform proposed by Rudd.

"The year of decision and delivery is becoming the year of backflips and broken promises," he told ABC News on Friday.