The Government was accused of cronyism after a parliamentary watchdog found the NHS had been packed with Labour activists, women and people from ethnic minorities.

Dame Rennie Fritchie, Commissioner for Public Appointments, called for a review of appointments to hospital boards and NHS trusts after her six-month inquiry found evidence of systematic political bias. Candidates had won posts, with salaries of up to £19,000, not on merit but because they were members of the Labour Party. Borderline candidates leapfrogged better-qualified rivals because they were women or from black and Asian backgrounds, Dame Rennie said.

The Tories seized on the report as the first concrete evidence that the Government had put "political correctness" above the competence of those in the higher levels of the NHS.

The report found that of local councillors appointed to health authorities and NHS trusts since the general election, 82 per cent were Labour. Of 343 councillor appointments from the three main parties, 284 were from the Labour, 36 were Liberal Democrats and 23 were Conservatives.

Dame Rennie said the system of inviting MPs and local authorities to nominate candidates was responsible for the extent of the problem. She recommended that MPs be barred from commenting on short-lists for appointments and for councils to be prohibited from nominating candidates. She said the politicisation of appointments was not new but it had "gained a new momentum" since the election.

"There are examples where a candidate's political association has been a decisive factor in their early selection and appointment and that decisions have not always been based on merit ... the process itself has been politicised. The public need to know that people who are appointed to run NHS boards are there on merit and are fit for the purpose."

Dame Rennie singled out Frank Dobson, former secretary of state for health, for responsibility for the decision to involve MPs and councils in the appointment process. The principles of the code of practice on making public appointments were "breached both in their letter and spirit", she added.

Liam Fox, the Tory health spokesman, said the report proved the political correctness of the system and the "the staggering extent to which New Labour snouts are in the trough. Given the emphasis which the report shows Frank Dobson to have placed on bringing in disproportionate numbers of women and ethnic minorities, irrespective of their qualifications, it is little wonder the NHS is in such a state."

Downing Street said the report was "serious". Tony Blair and Mr Dobson said they were proud of moves that resulted in 50 per cent of appointments going to women and 11 per cent to ethnic minorities.