The Tories blamed Tony Blair yesterday for creating a "culture of deceit" inside the National Health Service after the disclosure that nine hospital trusts had "massaged" waiting-list figures.

Last night the Government faced fresh allegations. A leaked letter by NHS bosses suggested that some hospitals were being encouraged to remove patients from waiting lists if they missed only one appointment.

The South East region of the NHS Executive proposed what it called a "one strike and out" policy for patient cancellations except where there were mitigating circumstances or cases were clinically urgent. The letter was leaked to the Opposition, who demanded a government statement.

During Prime Minister's questions, Iain Duncan Smith pushed Mr Blair on to the defensive over the critical report by the National Audit Office (NAO) revealing that 10 NHS managers has "inappropriately adjusted" waiting lists.

The Tory leader said the NAO report highlighted the "systematic pressure on doctors and managers to fiddle the waiting list figures" to meet the Government's targets. He cited letters sent to patients waiting for treatment who were told by hospitals they would be contacted again "in about 93 weeks' time".

Mr Duncan Smith said: "The Prime Minister is to blame for it. It is his culture of deceit that has forced the NHS to manipulate these figures."

Mr Duncan Smith said more people were now on NHS waiting lists than when Labour came to power in 1997. "The Prime Minister was elected to cut waiting lists and save the NHS. He cannot weasel out of that ... After five years, the whole country is on a waiting list, waiting for him to deliver."

Mr Blair admitted that the "bad practice" reported by the NAO was unacceptable but said the problem should be kept in perspective. He said the "misallocations" related to between 4,000 and 5,000 cases out of a total of 25 million operations in the same period and that the mistakes did not affect the waiting-list figures.

The Prime Minister insisted there had been a fall of 100,000 in the overall waiting list, when inpatient and outpatient treatment were added together. He said 70 per cent of people had their operations within six months. "I accept entirely that there is a very great deal more to do," he said.

Mr Blair sought to put the spotlight on the Tories' policies, saying that Labour would invest in the NHS to boost capacity and ensure it remained free at the point of use. He claimed the Tories would take away the investment and force people to pay charges. He cited comments by Mr Duncan Smith on television at the weekend that people would be prepared to pay for a visit to their GP.

Charles Kennedy, leader of the Liberal Democrats, asked Mr Blair: "You cannot be satisfied, surely, with the position whereby a very seriously ill NHS patient has their operation postponed so that someone who is in a less critical condition has their operation proceed simply to meet the institution of the waiting list targets which your Government has set?"

Mr Kennedy said: "Most people would consider it an absolute scandal that some of these managers, who either fiddled the figures or were downright incompetent, received golden handshakes or were redeployed in the NHS. Should they have not been out on their ear?"

The Prime Minister agreed that anyone engaged in misallocating people on the waiting list should be disciplined. Not everything in the NHS was bad, he stressed. "As well as bad things happening inside the NHS, there are excellent pieces of innovation, change and development. There are more nurses, doctors and hospital schemes coming through. In time, despite those examples of bad practice, the good practice will prevail," Mr Blair said.