The traditional model of hospital care needs to be changed to provide the best care, the health secretary says.
Patricia Hewitt said the district general hospital model, providing a wide range of care under one roof, was not right for the 21st Century.
Last week new NHS boss David Nicholson said emergency care was to be centralised in fewer hospitals.
But Ms Hewitt said the redesigned NHS would retain the values of the old health service in a speech in London.
There is growing unease about the potential closure of hospitals after Mr Nicholson, the chief executive of the NHS, said there would be about 60 reviews of hospitals, in his first interview since taking up the post at the beginning of September.
Government policy includes shifting care away from hospitals into community settings and placing greater emphasis on the private sector.
Doctors' leaders have warned that if services such as A&E, cardiac care and paediatrics are taken away from hospitals, the remaining services such as planned surgery and intermediate care could be eventually whittled away.
Ms Hewitt told the audience of health professionals and campaigners that if the public wanted care to improve and waiting lists to carry on falling they would have accept that the structure of the NHS would change.
This could mean patients having to travel further for emergency care but, once they got there, it would be better and more expert than they would have got at their traditional hospital, she said.
But she attempted to reassure critics that the "values of the NHS will never change" as it would always be free at the point of need.
'No artificial limits'
Ms Hewitt said: "The structures that were right in the 1960s - when the model of the modern district general hospital were defined and planned - are not right today."
Ahead of the speech, she said: "What the NHS is doing is taking a lot of the care available only in acute hospitals and taking it into patients' homes."
She also said there would be no "artificial limits" on the role of the private sector in this new vision for the health service.
"We are not privatising or marketising the NHS. The NHS has always used the private sector - the great majority of GPs have always been private businesses depending on profits from their own practice."
However, the government is facing a battle to convince staff and the public that the measures are justified.
Frances Blunden, principal policy adviser at campaign group Which?, said: "While we can't argue with the rationale behind creating hi-tech regional trauma centres, there is a real concern about where most people's urgent care needs will be met in this new structure."
Unison head of health Karen Jennings said: "Patricia has not spent her life in health or health policy, but all of the trade unions in health - all of the affiliates, all of the non-affiliates, Unison, the BMA, the Royal Colleges of Nursing and Midwifery - are all saying this is wrong."
'Vulnerable to closure'
The British Medical Association has said it accepts that advances in technology mean the most up-to-date care can only be provided in fewer hospitals.
But BMA chairman James Johnson has warned that taking services away from some risks making them vulnerable to closure in the future.
Shadow health secretary Andrew Lansley said: "Labour are trying to cover up for their failures in the name of reform."
And Liberal Democrat health spokesman Steve Webb added: "Calling for yet more 'drastic' reform will horrify hard-working doctors and nurses, who have been subject to permanent revolution in the health service."