'Not the be-all and end-all'
Tony Blair "believes passionately" in the setting up of foundation hospitals, insisting that record resources for public services have to be tied to reform.
The prime minister has been trying to win over more than a 100 Labour
MPs who have signed a motion against them by stressing they are not elitist and will not usher
in a two-tier health service.
Mr Blair, who attended a meeting of the Parliamentary Labour Party on Wednesday, wants to give selected hospitals greater financial independence and more freedom to run their affairs.
Alan Milburn interferes far more with the NHS than I did when I was the health secretary
But critics say the idea will lead to a two-tier health service, an accusation that Health Secretary Alan Milburn tried to rebut in a speech on Wednesday.
Foundation hospitals are at the forefront of Tony Blair's plans to reform public services.
Supporters say the idea is to encourage local innovation by giving hospitals more freedom to manage their own affairs while strengthening their links with the communities they serve.
Critics - including many Labour MPs - say in practice this will set hospital against hospital, leading to a two-tier health service.
Despite the opposition Mr Blair appears determined to press ahead with reform of the public services and, in part, the introduction of foundation hospitals.
The prime minister's official spokesman insisted that at a time when there were record resources going in to public services, the extra money had to be tied to reform.
MPs are set to vote on the issue next Wednesday but already there are warnings of a major rebellion.
More than 130 Labour MPs have signed a Commons motion (EDM) opposing the move.
Some Labour critics are now warning Mr Blair he may have to rely on the support of the Conservative Party to ensure Mr Milburn's bill is passed.
Being dependent on the opposition to get through a key part of his domestic legislation would be almost unprecedented and deeply embarrassing for the prime minister.
But even that is not guaranteed since although Conservatives back foundation hospitals, senior Tories say Mr Blair should not count on their support.
Mr Milburn said he accepted that foundation hospitals were "very, very controversial", but stressed that they were an "important policy" in the government's reform agenda.
But faced with a backbench revolt, the health secretary added: "It's not the be-all and end-all of the reform package but it is extremely important and that is why we will be bringing the bill forward.
"Frankly now is not the time to break off reform. I think that would be the wrong thing to do."
Here we have a government ... dependent on the main opposition party to get its domestic flagship bill through
Mr Milburn told BBC Radio 4's Today programme: "I freely admit that of course this is a very, very controversial policy, but I believe it is absolutely fundamentally the right policy.
Mr Milburn said foundation hospitals were not about a two-tier system, but would be NHS hospitals, subject to NHS standards and systems of inspections, with greater freedom and under local control of doctors, nurses and the community.
He warned Labour rebels not to "give succour" to the Tories who are "playing games about this".
"Their policy is bound to be to cause the maximum embarrassment and the maximum distress ..."
But Paul Miller, chairman of the BMA's consultants committee said: "The government's proposals for Foundation Trusts have little to do with giving hospitals local freedom from Whitehall control and everything to do with abdicating responsibility whilst imposing political targets.
"The government's policy on foundation trusts is confused, illogical and could contribute to the end of the NHS."
Former health secretary Frank Dobson, a leading rebel, warned Mr Milburn to stop interfering, stressing that health professionals just wanted to get on with their jobs.
The Lib Dems are opposed to the proposals, with health spokesman Evan Harris stressing that "they fail to provide real decentralisation" and "will not put power back into the hands of doctors, nurses or patients".
For the Tories, shadow health secretary Liam Fox added: "Here we have a government with a huge majority in Parliament dependent on the main opposition party to get its domestic flagship bill through and what a mess it is."
Paul Miller, chairman of the British Medical Association's Consultants Committee, was also unimpressed by Mr Milburn's claims.
"The government's proposals for Foundation Trusts have little to do with giving hospitals local freedom from Whitehall control and everything to do with abdicating responsibility whilst imposing political targets."
And Chancellor Gordon Brown refused to say, when pressed by the Commons Treasury select committee, whether other hospitals would suffer because they would not have the fundraising powers available to foundation hospitals.
"I am not going to get into this," he said.