The NHS should end the financial year with a £1.75 billion surplus, the Department of Health said.
The figure for 2008/09 is a forecast based on data from the first three months of the financial year.
The Department said the surplus - predicted to be around 2% of the overall NHS budget - was in line with expectations and would "stay within the NHS to improve patient care".
The gross deficit of the NHS is predicted to be £45 million at the end of the year, down from an actual £125 million at the end of 2007/08 and £1.3 million in 2005/06.
David Flory, director general of NHS finance, performance and operations, said: "This is an excellent start to the year for the NHS.
"A strong financial position backed by good progress on delivery will continue to ensure high quality services for patients."
The report also said the NHS was on track to meet its end-of-year target for no patient having to wait longer than 18 weeks from GP referral to treatment.
