The NHS test and trace system in England is letting 6,000 staff go by the end of August, the government has announced.
The remaining contact tracers will work alongside local public health teams to reach more infected people and their contacts in communities.
This is to make the system better at tackling the virus, its boss says.
The approach has already been used in coronavirus hotspots in Blackburn with Darwen, Luton and Leicester.
And it is now being offered to all upper tier local authorities who are responsible for public health locally.
The national service will shrink from 18,000 contact tracers to 12,000 with those non-NHS call handlers left being deployed as part of dedicated local test and trace teams, the Department of Health says.
This means local areas will have “ring-fenced teams” from the national test and trace service.
NHS staff who offer advice to people who have tested positive for coronavirus will not be laid off, and staffing in Public Health England’s local health protection teams has already increased, it added.
Another 200 walk-in testing centres will also open by October.
As part of NHS Test and Trace, public health teams dealing with outbreaks in factories or care homes have consistently reached more than 90% of the contacts on their lists.
Outside of those very localised outbreaks, it is call centres who trace contacts.
But they don’t reach as many contacts – their success rate for reaching contacts who don’t live together peaked at just over 70% in the middle of July, but has fallen since then.
Dido Harding, the head of NHS Test and Trace, said: “We have always been clear that NHS Test and Trace must be local by default and that we do not operate alone – we work with and through partners across the country.
“As we learn more about the spread of the disease, we are able to move to our planned next step and become even more effective in tackling the virus.
“After successful trials in a small number of local areas, I am very pleased to announce that we are now offering this integrated localised approach to all local authorities to ensure we can reach more people in their communities and stop the spread of Covid-19,” she said.