It says the moves will make pay more flexible and encourage more teamwork.

But doctors are not so enthusiastic.

The British Medical Association (BMA) and the Hospital Consultants and Specialists Association (HCSA) say the proposals are part of a government effort to reduce salaries and bring in local pay bargaining.

The leaked proposals are contained in a December 14 letter from then health minister Alan Milburn to Professor Clive Booth, head of the nurses' pay review body.

Mr Milburn says the government wants to end the current rigid boundaries between the different functions performed by health staff and introduce multi-skilling.

He says the present system is "outdated and not sustainable".

He adds that there is "a muddle of local and national pay which was confusing and divisive".

"We need a new start, with a simpler, modernised national pay system, a clear role for local employers, a national framework of structured support to underpin local implementation and clear performance management," he writes.

Local pay

The proposals - which are linked to attempts to simplify nurses' pay structure - amount to a radical overhaul of the NHS, with boundaries between doctors, nurses and other health workers being broken down and local trusts being able to give more money to people with extra skills and responsibilities.

Another of the options is to extend the pay review bodies to cover all one million health service employees and not just doctors and nurses, which ministers believe could put paid to pay disputes.

The Independent newspaper reported in mid-January that the review body would have several sub-sections dealing with doctors, nurses and other health workers.

A Department of Health spokeswoman said reports about the shake-up were "speculation", although the government has publicly spoken about plans to change the pay review system to ensure any recommendations are both fair and affordable.

Opposition health spokesman Alan Duncan asked if the government was doing a U-turn, since it had long opposed regional pay variations.

Doctors responded angrily to the leaked letter.

The HCSA said it was "totally opposed" to having a single pay review body.

"It is treating doctors as just another employee and they are not. Doctors have different needs and issues from nurses and porters.

"It would be like linking the pay of the lowest shorthand typist with a top lawyer - it just wouldn't work."

The association also warned against localising pay, saying this would undermine the founding principles of the NHS that people should receive the same care wherever they go in the UK.

Suppressing pay

The BMA said differences in training, skills and responsibilities between different health workers were too great to make a single pay review body work.

It feared the body would not be in the interests of doctors or nurses and could lead to "a downward spiral" for NHS staff.

Dr Ian Bogle, chairman of the BMA council, agreed that all health workers should come under independent pay review bodies, but he said there was a danger is all coming under the same body.

The pay proposals are one of the last actions of former health minister Alan Milburn

"Under one umbrella it would be too tempting for the government to suppress pay," he said.

He felt it was "bizarre" timing for the shake-up to be revealed two weeks before the nurses' and doctors' review bodies are due to report.

But Bob Abberley of health workers' union Unison said the shake-up was " good news" and could mean an end to pay disputes.

He said doctors and nurses had not been on strike since they were given independent pay review bodies in 1982.

He believes more team work will mean fairer pay for all health workers.

"Healthcare is a team sport. Doctors cannot do their job without nurses and nurses cannot do their job with administrative workers and laboratory technicians.

"We need a pay system which recognises that," he said.

The Royal College of Nursing (RCN) said its main concern was that nurses' pay was fair.

It is also facing a far-reaching overhaul of nurses' pay structure, with the government considering replacing the old grades with a new three-tier system.