NHS Direct provides the non-emergency phone line in nine regions of England but has said that it is "seeking to withdraw from the contracts it entered into".
A spokeswoman said the contracts, which cover more than a third of the population of England, were "financially unsustainable".
While officials have promised that patients who live in affected areas will "continue to receive a prompt and safe service", health unions warned that some parts of the service were "in chaos".
The NHS 111 line, which replaced NHS Direct as the number to call for urgent but non-emergency care, has been riddled with controversy since its inception on April 1.
The line suffered many teething problems, with patients complaining of calls going unanswered, poor advice given and calls being diverted to the wrong part of the country.
Just a month after its launch, leading medics warned that the "problematic" roll-out of the system left many patients not knowing where to turn.
NHS Direct originally won 11 of the 46 contracts across England to provide the 111 service.
Earlier this month the organisation announced that it would be unable to provide the service in North Essex and Cornwall.
But now it is also planning to stop providing the service in Somerset, Buckinghamshire, east London and the City, south east London, Sutton and Merton, West Midlands, Lancashire and Cumbria, Greater Manchester, Merseyside and Cheshire.
NHS Direct announced that it was preparing for a "planned withdrawal" from the contracts after projecting a £26 million deficit for the coming financial year.
A spokeswoman said: "The trust is seeking to agree a managed transfer of NHS Direct's 111 services, and the frontline and other staff who currently provide them, to alternative providers."
Chief executive Nick Chapman said: "We will continue to provide a safe and reliable NHS 111 service to our patients until alternative arrangements can be made by commissioners.
"Whatever the outcome of the discussions on the future, patients will remain the central focus of our efforts, together with protecting our staff who work on NHS 111 to ensure that the service will continue to benefit from their skills and experience."
The organisation "encountered significant problems" when it launched three contracts in the north west of England and the West Midlands in March, the spokeswoman said.
She said the calls took "twice as long as expected" and as a result, NHS Direct did not have "sufficient capacity" to handle all the calls that it received.
NHS Direct's annual report and accounts for 2012/13 note that it faced challenges after local health providers said they would pay for no more than £7 to £9 for each call to cover staff salaries and other costs.
But during the pilot of the scheme, NHS Direct worked under the assumption that providers would pay £13 for each call.
The report states: "It is now clear that the trust is not able to to provide the 111 service within this lower cost range, and that the 111 contracts that the trust has entered into are financially unsustainable."
NHS England said it would support local health providers to ensure alternatives would be put in place.
Deputy chief executive Dame Barbara Hakin said: "Our immediate focus is to ensure that this level of service and improvement is delivered consistently.
"We are working closely with the Trust Development Authority and the board of NHS Direct to ensure that NHS Direct continues to provide a safe, high quality service to patients while alternative, long-term, providers are secured.
"We have been in discussions with NHS Direct for some time over this issue and they have assured us they are committed to continue to provide services.
"We are also having constructive discussions with a number of potential new providers who could take on these contracts, specifically with the local ambulance trusts who have experience and a strong track record in provision of similar services."
At present, 593 NHS Direct employees work on NHS 111. It also employs 415 agency staff to work on the service.
NHS Direct's other services will be "unaffected", the spokeswoman said.
Earlier this month, the Health Select Committee criticised ministers for the "premature" roll-out of the 111 service.
It said the service was implemented "without attempting to interpret the evidence from pilots, which themselves were limited in scale and scope".
A spokesman for Prime Minister David Cameron conceded there had been problems with the initial implementation of 111, but insisted performance and patient satisfaction was now high.
"He is confident that we will continue to push up standards and deliver a high level of service for patients across the country," the spokesman said.
But health officials expressed their concern over the announcement.
Dr Chaand Nagpaul, chair of the British Medical Association's (BMA) GP committee, said: "The implementation and planning of NHS 111 has been an abject failure.
"The decision by NHS Direct to seek a withdrawal from its contracts to provide NHS 111 reveals worrying flaws not just with the tendering process for NHS 111 contracts, but for how contracts are awarded and monitored throughout the NHS.
"The Department of Health gave the BMA written assurances that there would be strict safeguards in place to ensure that NHS 111 providers would have the clinical and financial ability to deliver a safe, effective service to patients.
"A number of local GPs and the BMA raised concerns during the tendering process about the low nature of some of the successful bids which were ignored."
Peter Carter, general secretary of the Royal College of Nursing, said: "This latest announcement raises concerns that a locally-commissioned, fragmented system may simply not be able to provide the high standard of service and advice that patients need.
"Despite the best efforts of their staff, some parts of the NHS 111 service are now in chaos, and urgent action is needed to prevent this from having tragic consequences for patients."
Sara Gorton, deputy head of health at Unison, said the union previously warned that the new service would be a "shadow" of the former helpline.
"The Government rushed through the trials of 111 in its haste to increase private competition and it is patients who are now paying the price," she said.
Unite's national officer for health Barrie Brown said: "There was no logic for the Government to replace the successful single-service NHS Direct, which was highly rated by users, with a fragmented NHS 111 set up with 46 different contracts.
"The impetus here is not patient care, but cost-cutting by a Government whose foot is firmly on the privatisation accelerator."
Mike Adamson, managing director of the British Red Cross, said: "The 111 service is an absolutely vital source of information and reassurance to the British public, especially for those who cannot easily get out and about to visit their GPs.
"If people don't have confidence in it, or if it's not available in their area, then they will present at A&E instead, putting further strain on already stretched services."