The Government has ordered health chiefs to press ahead with job cuts in order to put the National Health Service on a secure long-term financial footing.
At a Downing Street summit yesterday, Tony Blair urged local health managers to bite the bullet and eliminate deficits estimated at more than £600m that have led to the announcement of about 7,000 job losses.
The "short-term pain for long-term gain" strategy will worry some Labour MPs, who fear the spate of job cuts is damaging the party's image as the custodian of the NHS and could harm its prospects in next month's council elections in England.
Mr Blair told the 16 trusts represented at the meeting that the NHS faced "challenging times", adding: "What is really important is to hold your nerve."
Later, he told BBC Radio there was "tremendous progress" in the health service, saying more than half the deficits were in just 7 per cent of the trusts and the staff cuts should be seen in the context of an extra 300,000 NHS jobs being created between 1997 and next year.
Sir Ian Carruthers, the acting chief executive of the National Health Service, said: "The time to deal with the problems is now. The goal for 2006-07 is to get the NHS in net balance, reduce the number of organisations with deficits and improve patient care and outcomes. People need to acknowledge the deficits. They need to recognise the problem."
Patricia Hewitt, the Health Secretary, admitted it could take longer than a year to tackle the financial problems in some areas. "Where you've got organisations with a relatively small deficit, then they certainly ought to be able to sort it out within one year. In other cases, it is going to take longer," she said.
The aim of the summit was to spread best practice on how to eliminate deficits. Ideas included more day surgery, earlier discharge of patients and reducing agency and temporary staff.
Dr Duncan Newton, the medical director at the Bradford Teaching Hospitals Foundation Trust, urged other hospitals to follow its lead by asking patients to walk to the operating theatre to cut portering costs.
Dr Gill Morgan, the chief executive of the NHS Confederation, which represents more than 90 per cent of NHS organisations, said: "A minority of trusts are experiencing financial problems as a result of the many short-term pressures upon the service including meeting targets, the reform programme and workforce reform, as well as longer-term structural problems that have been exposed by changes to accountancy rules. We are calling on the Government to think more carefully about reforms, changes and targets. Whilst they take us in the right direction, trying to do too much at once has caused many of the current problems."
Andrew Lansley, the shadow Health Secretary, said: "It is clear the meeting was cobbled together at the last minute, in an attempt by Downing Street to get a grip after the Department of Health lost control over NHS finances. The NHS needs reform... But, even today, reforms are confused and inconsistent."
Ms Hewitt announced yesterday the number of strategic health authorities will be reduced from 28 to 10, and said the changes would result in a more streamlined management.