Tony Blair has pledged to push on with NHS reforms, predicting the changes offer the "best chance" of delivering a stronger, more effective service.
At a meeting with local NHS bosses, he admitted that some parts of the service faced big challenges.
But he said most trusts did not face financial problems, and most people's experience of the NHS was positive.
NHS trusts have announced the loss of nearly 7,000 jobs in recent weeks, and a new report predicts 100,000 could go.
Mr Blair said over half of the predicted NHS deficit had been run up by 7% of trusts.
"In many circumstances what is being exposed are problems that have built up over a considerable period of time, and frankly it is time we dealt with them."
He said Labour had overseen many improvements in the health service, including failing waiting lists and times, and better cancer and heart care.
But he added: "Despite all of that there is a real challenge for certain of the trusts, and for the system as a whole, as we introduce what is effectively a re-engineering of the whole system of the NHS in order to put the patient at the centre of it, and to introduce proper financial disciplines and accountability."
Mr Blair's intervention comes as centre-right think-tank Reform warned NHS changes will lead to a 10% cut in staff.
Its report said the health service has focused on increasing the quantity of staff rather than the quality in recent years.
And Reform predicts the results of changes such as a move away from hospital-based care would be a 10% reduction in staff, which - with a workforce of 1.3m - would mean a further 100,000 job cuts.
Report author Professor Nick Bosanquet said: "The right change in strategy will be achieved by the government's highly welcome reform programme.
"The result will be a smaller NHS workforce with higher professionalism, morale and job satisfaction."
Unions rejected the idea, saying it was "ridiculous to suggest that with fewer staff we would all enjoy better patient care".
Health Secretary Patricia Hewitt said some of the ideas such as more flexibility made sense but she rejected the 100,000 job cut figure.
She said: "It is very important to keep this in perspective, across the NHS we are talking about a deficit of around 1%.
"As our reform programme beds down, some parts of the NHS will probably reduce staff but other areas, for example in primary care, will probably expand as more services are delivered closer to the patient and outside hospitals."
Nigel Edwards, director of policy at the NHS Confederation, agreed some job cuts were necessary as part of the reforms.
But he added that was not the "full story" as some hospitals had found themselves in a financial hole in trying to keep up with government targets.
"The quickest way to meet A&E targets or waiting time targets is to increase the level of staff, but the funding is not always there and that is what has happened in some cases."
Shadow health secretary Andrew Lansley said the government had "lost control of finances", and accused ministers of "disastrous management of the NHS".
"It is perfectly clear that the government have allowed there to be a dramatic increase in the number of administrators in the NHS, without a commensurate increase in the overall quality of management."
And Liberal Democrat health spokesman Steve Webb also criticised the government, claiming "money is being wasted on a costly and damaging permanent revolution in the health service".
Niall Dickson, chief executive of the independent think-tank King's Fund said: "The NHS is not in crisis - there have been real achievements over the last few years, but it is in danger.
"The priority for the government must be to sort out the financial turmoil, that means tackling long standing issues in some local services that should have been sorted years ago and getting a much tighter grip on costs."