The decision to stop providing IVF treatment at the taxpayers' expense would be highly controversial and is likely to be resisted by Labour supporters who believe it would undermine the party's long-standing commitment to a comprehensive service free at the point of use.
However, one senior Labour source said: "Pregnancy is not an illness. Therefore the treatment for IVF should not be treated as an illness on the NHS."
The proposals are being drawn up in a health policy document to be published in June. It will be presented to the next annual party conference in October.
The spending restrictions by the shadow Treasury team led by Gordon Brown will also force the health team to abandon Labour's commitment to reduce and eventually phase out prescription charges, a switch that is also likely to draw strong criticism from the party's supporters.
Behind the change of thinking on IVF is a belief among Mr Blair's policy advisers that spending on items at the margins of the NHS is a nettle which the Secretary of State for Health, Virginia Bottomley, has failed to grasp.
The cross-party Commons select committee on health found that few health authorities offer IVF on the NHS, and criticised Mrs Bottomley for not being more explicit about the health rationing which is already going on.
The committee warned that the provision of treatment on the NHS was patchy since health authorities faced pressure on their budgets. Labour's move is part of a determination to stop the fragmentation of the NHS.
More than 11,000 women receive IVF treatment a year, with about a quarter of health authorities providing funding for it. While still largely a private service for those who can afford it, patient demand has been driving wider NHS provision.
Free removal of tattoos, now rarely available on the NHS, is also likely to be dropped.
The abandonment of the commitment to phase out prescription charges is likely to be replaced by a policy of freezing fees at the present level, and increasing exemptions for certain long-term illnesses or treatments, such as hip replacements, which require expensive drugs.
Although Labour has condemned the rise in prescription charges to £5.25 as a tax on being sick, the frontbench team has been warned there will not be enough money available to cut the charges, which raised £265m for spending on the health service in 1993/94.
The Labour team is also considering cutting the exemptions for some patients, such as pregnant women. That would be in line with the party's health consultation document, Health 2000, which said: "Those entitled to free prescriptions for a specific reason should not automatically receive all other medications free of charge."
One option being pressed on the health team is for some means-testing to be applied to the exemptions on prescriptions, denying free prescriptions to well-off patients.
In spite of reports that Mr Blair's office was in conflict with Margaret Beckett, the shadow Health Secretary, Labour leaders are backing her determination to abolish the internal market in the NHS and to end the alleged two- tier system under which patients of GP fundholders may jump queues for treatment.
Labour will replace fundholders with community-based health commissioners. One idea is for half of the commissioners to be drawn from the medical profession, including family doctors, and half to be laymen, who would defend their actions in public.
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