Up to £500m could be recovered from overseas visitors' and migrants' use of the NHS every year, ministers believe.
The figure represents a quarter of the costs of treating such patients, Department of Health data suggested.
But ministers said it was a realistic target as some of the spending was unavoidable.
The savings would come from a levy on foreigners, deterring health tourism and getting the NHS to claw back money it is owed by other countries.
The government is currently consulting on the measures it will be taking to tackle this issue.
It has already said a £200-a-year levy on migrants from outside Europe staying for up to five years will be imposed.
Health Secretary Jeremy Hunt said this could raise £200m a year.
A cost-recovery unit will also be set up to help hospitals claw back money they are owed by other governments for treating foreign nationals visiting the UK.
At the moment just £73m a year is recouped out of more than £460m owed.
Meanwhile, health tourism - whereby people deliberately travel to the UK to get NHS care - is estimated to cost between £70m and £300m.
'Conservative'The government accepts it cannot recoup all of this money and entirely stop health tourism and so it has put forward the "conservative" £500m figure.
To achieve this, it said a better system of identifying when visitors and migrants got treatment was needed.
More details on what this will involve will be revealed in the coming weeks.
But Mr Hunt said the figures - compiled with the help of independent researchers - showed the extent of the problem.
"We have one of the most generous systems in the world when it comes to healthcare for foreign visitors, but it's time for action to ensure the NHS is a national health service - not an international one," he added.
Overall, the research estimated about £2bn was spent on treating visitors and migrants, but as some of this involved emergency care and the treatment of infectious diseases it would be inappropriate to consider this was money that should not be spent, Mr Hunt said.
'Exaggerated'Shadow health secretary Andy Burnham said: "We are not against improving the recovery of costs from people with no entitlement to NHS treatment."
But he added the figures were based on a "large number of assumptions" and was more about "spin than substance".
Dr Chaand Nagpaul, chairman of the British Medical Association's GPs committee, said the government's £500m savings figure was "exaggerated", partly because it did not take account of the costs of implementing its plans.
He said migrants paying the proposed £200-a-year levy could be more likely to use the NHS to "get their money's worth", and he said the cost of a single hospital outpatient appointment would be more than £200.
Dr Nagpaul said doctors should not be distracted from their work in order to check the eligibility of patients for treatments.
Mr Hunt said he did not want to "turn GPs into border guards" and no one would be denied emergency treatment, but foreign visitors must make a "fair contribution".
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