Patient records containing information on mental health conditions, diseases like cancer and habits such as drinking or smoking will be sold to organisations such as drug and insurance companies, it is claimed.
Information on the nation's medical history will be held on a giant database called care.data, a move which NHS England says is a key priority.
The database will be controlled by a new body, the new Health and Social Care Information Centre (HSCIC), starting in March.
Patients will be able to opt out of having their information shared.
NHS England said that once it is open, organisations such as charities and universities can apply for access to the database.
But the Guardian said other organisations such as drug and insurance companies would have access, prompting privacy fears that anonymous data could be matched to insurers' medical files.
Researchers and other analysts have been able to apply for pseudonymous data from hospital statistics for many years by applying to the HSCIC, NHS England said.
It said the data would be "pseudonymised", meaning that means to identify patients will be removed and replaced with a meaningless pseudonym that bears no relation to their real identity.
Extracted, or sold, information will contain NHS numbers, dates of birth, postcodes and ethnicity and gender, the newspaper claimed.
If an application for data is approved firms would have to pay to extract information. Some personal information would be removed, but not enough to make it completely anonymous.
Mark Davies, the HSCIC's public assurance director, told the Guardian there was a "small risk" patients could be re-identified by matching the "pseudonymised" data against medical records already held by insurers and pharmaceutical companies.
He said: "You may be able to identify people if you had a lot of data. It depends on how people will use the data once they have it. But I think it is a small, theoretical risk."
Mr Davies said that in the eyes of the law, government departments, university researchers and drug or insurance companies were indistinguishable.
Julia Hippisley-Cox, a professor of general practice at Nottingham University who is a member of the NHS's confidentiality advisory group, said that patients must be able to find out who has their identifiable data and for what purpose.
She told the Guardian: "There should be a clear audit trail which the patient can access and there needs to be a simple method for recording data sharing preferences and for these to be respected."
A Department of Health spokesman said that anyone who objects to their information being shared beyond their own care through the HSCIC, it will be respected, and they can opt out via their family doctor.
The spokesman said: "Sharing information securely and appropriately will help the NHS improve care...
There are strong legal safeguards in place to protect patients' confidentiality."
To help ease public fears, this month NHS England is sending out a leaflet to 26 million households to explain that parts of the care.data database will be shared with "researchers and organisations outside the NHS", unless they opt out.
Full data "extractions" will be rolled over a three-month period, and data will be fully available by May, NHS England said.
A spokesman said: "Over the years, many of the most innovative uses of pseudonymous hospital data have come from outside organisations, including universities, think tanks and data analytics companies.
"In the future, we want charities and universities to use pseudonymous data for the benefit of NHS patients. For example, they may use the de-identified data to help develop new services and other innovations in healthcare, to build predictive models, and to detect unwarranted variations in care.
"Likewise, we think it would be wrong to exclude private companies simply on ideological grounds; instead, the test should be how the company wants to use the data to improve NHS care."
"The household leaflet supports public awareness raising of how information is shared for purposes beyond direct care including for research purposes.
"Researchers have been accessing data for many years to bring benefits to all patients. We think that it is important that the public are aware of this and understand the benefits sharing information can bring."