A leaked memo saying that Great Ormond Street Hospital might have to reduce the number of children it treats over the next few months has provoked angry denials from managers.

According to the memo, the hospital has exceeded treatment targets for the first quarter of the year. It says the hospital as a whole went 14 per cent above planned activity levels - although hospital officials say that was only in June - and that all specialities have been asked to draw up plans to reduce activities for certain purchasers. Critics say that could mean children waiting for treatment or even being turned away.

But the hospital's general manager, Sir Anthony Tippet, claims the memo misrepre-sented comments he made at a meeting of senior medical staff. 'I was saying if the figures were very high we would have to consider doing something about it. I said, 'put your thinking caps on'. The memo went out as a result of that.'

He denies any suggestion of a cutback in hospital activity. 'I believe from my experience it will even itself out. The swings are not sufficiently wide to give me cause for alarm.'

The memo names four authorities where the hospital is treating more in-patients than agreed in the contract set up with them at the beginning of the year: South Essex, North Essex, Camden and Islington, and Bexley and Greenwich.

A hospital spokeswoman said Great Ormond Street had achieved higher performance than expected in certain areas since entering the NHS internal market. But for the first quarter of this year - from April to July - the number of inpatients was 7.7 per cent over target and outpatients 2.8 per cent.

Labour's health spokesperson, Dawn Primarolo, condemned the situation.

'Children in some parts of London will now get desperately needed treatment, not on the basis of their clinical need, but depending on where they live. Labour condemns yet another example of the internal market riding roughshod over commonsense and failing to serve the interests of patients. '