The Rt Rev Mark Santer's remarks from the pulpit of Birmingham Cathedral - the most outspoken attack on the Tory changes to the NHS by a leading churchman - enraged ministers.
The Bishop said: 'The culture of competition has set doctor against doctor, hospital against hospital, colleague against colleague. Priorities and policies come to be determined not on the basis of human need but in accord with the accounting policies.
'Despite all the rhetoric about patient choice . . . the patient is reduced to the status of a unit of consumption and exchange. That, in the Christian view, must be wrong because it is treating people as means and instruments instead of ends.'
Tom Sackville, a junior health minister, said: 'I take particular offence at the suggestion that making the health service efficient and businesslike is unchristian.' He said the Bishop had 'misjudged and mis-stated' Government health policies.
The Bishop also spoke of the distress caused by the changes: 'It is no exaggeration - I speak as an observer - to say that the current wave of reforms in the National Health Service is proving deeply distressing to people who have a commitment to public service, who see their profession as a calling, who care profoundly for the quality of the service they have been trained to deliver, and who observe the human consequences of what is happening around them.'
But Mr Sackville accused the Bishop of an 'ill-considered incursion into party politics'. 'It is hard to take this as a simple expression of the word of God. To run the health service in a way that did not provide maximum health care for patients would indeed be unchristian. I think the Bishop has run into an argument of which, for the husband of an NHS trust chairman, he knows surprisingly little.'
The Bishop's wife, Dr Henriette Santer, is chairman of the South Birmingham mental health trust.
The attack by the Bishop, who was addressing a service for the annual British Medical Association conference, was reinforced by doctors' leaders. Mac Armstrong, secretary of the BMA, said there was a mood of 'steely determination' that doctors would stand by the values of their profession.
A critic of Thatcherism, the Bishop said in 1993 that greed had become a national institution and accused managers of actions that were helping to rot the moral fabric of society.
The growing resistance to the changes to the NHS will alarm ministers as the Government fights to regain its popularity. The changes, introduced under Kenneth Clarke, included the creation of an internal market, with fund-holding GPs and health authorities acting as purchasers and NHS trust hospitals acting as providers.
David Blunkett, Labour's health spokesman, said: 'I think this is a timely and measured assessment of the deep malaise inflicted on the NHS and on the morale of all who work in it, by the Government reforms'.