The Health Secretary has rejected claims patients will suffer because of the NHS cash crisis, after a hospital trust said it was cutting 1,000 jobs.
Patricia Hewitt also denied that the raft of current NHS reforms had caused the present financial problems, adding that they would actually solve them.
Nursing unions said there was no doubt care would be affected by the job cuts.
Shadow Health Secretary Andrew Lansley said operations were being delayed because of financial mismanagement.
Ms Hewitt's comments come after the University Hospital of North Staffordshire in Stoke-on-Trent announced it was cutting a seventh of its 7,000-strong workforce in a bid to claw back a £17 million black hole.
An estimated 370 of the posts will be nurses and midwives.
Dr Beverly Malone, general secretary of the Royal College of Nursing, said inevitably patients will suffer as operations are cancelled or delayed and wards are closed.
She added: "The research shows that when there are not enough nurses in hospital that patients have more infections, more falls, more pressure sores and that their mortality rates goes up."
But Ms Hewitt said in the case of trusts like North Staffordshire, managers were clear that efficiency savings, such as reducing administration costs and increasing the number of day operations, could be made without affecting patient care.
She said the government's reform programme had exposed problems in trusts like North Staffordshire which had been building up for many years, but would ultimately resolve them.
"They are hoping to solve the problems both by making sure that we get much fairer funding, much better financial discipline but also by giving patients more choice by making sure that money follows patients we actually give the hospital more incentives to improve patient care and the value for money with it."
But she added that the hospital had got into problems because it was carrying out more work than it could afford to do.
The hospital's chief executive Anthony Sumara said there were a number of steps that could be taken to reduce costs without affecting care.
NHS DEFICIT HOTSPOTS
1. Teesside/Hartlepool: Vacancy freezes in two trusts
2. Lincolnshire: Extra government funding secured to cover £35m deficit in two trusts
3. Staffordshire: One hospital cutting 1,000 posts
4. Cambridgeshire: Posts cut, operating theatre closed
5. Suffolk: Community hospital closures planned
6. Oxfordshire: Cuts to services
7. London: Three trusts with deficits above £20m, staff reductions and recruitment freezes taking place
8. Sussex/Surrey: Non-essential jobs cut, routine surgery reduced
9. Cornwall: Staff cuts, wards and operating theatres closed
For example reducing the length of time patients stay in hospital could lead to a reduction of 150 beds.
But Mr Lansley also has his doubts.
"At the moment we've got primary care trusts who have mismanaged much of this across the country who are delaying operations who are telling hospitals they can't treat patients even though they have the capacity to do so.
"It is frankly not just, the questions the public have a right to ask are not just where has all the money gone? but how can it be right for there to be capacity created in the National Health Service, patients who need to be treated and an NHS bureaucracy that is stopping that happening," he said.
The latest predictions say the NHS in England could run up a deficit of the up to £800 million.
This has been caused partly by more expensive drugs but mostly by a big increase in staff pay, the cost of which the government admits it underestimated.
According to the Financial Times now a row has broken out in government over whether the doctors and nurses should be given above-inflation pay rises recommended by their pay review bodies.
Chief executive of health think tank the King's Fund, Niall Dickson, said 40% of the extra money invested into the NHS had gone into pay rises, with ministers putting in place a range of new contracts for GPs and consultants.
Nigel Edwards, director of policy at the NHS Confederation, said to push forward with so many reforms so quickly was a risky strategy.
BBC Health Correspondent Adam Brimelow said despite the government's reassuring words, hospital chief executives were giving a "strong sense of downsizing going on across the service in order to balance the books."