Labour's leadership has suffered two embarrassing conference vote defeats over its controversial plans for foundation hospitals.
Blair uses a rowing machine during a hospital visit before the vote
A motion tabled by the Unison union opposing the plans was carried on a show of hands shortly after a passionate defence of the proposals by Health Secretary John Reid.
And a second government-backed motion on the NHS was also defeated following a card vote.
The defeats are a blow for the leadership, but are unlikely to lead to a change of heart on the part of the government.
Health minister John Hutton said after the votes that the foundation hospital proposals were right for the NHS and for patients.
But former health secretary Frank Dobson urged the government to abandon the plans, warning they faced defeat in parliament.
And Unison leader Dave Prentis vowed Labour members would continue to press ministers over the policy.
Defeat at conference has been rare for Tony Blair: prior to this year he has only twice before suffered setbacks, over pensions and the private finance initiative.
Neither defeat led to a change in policy.
This year's defeats came ahead of what was a highly-charged and often emotional debate on Iraq, with a number of delegates criticising Mr Blair's stance.
But a vote backing the party's approach to foreign affairs was easily carried.
Mr Reid had urged the Bournemouth conference to support the foundation hospitals proposals, saying failing to address the need for change in the NHS would be a "betrayal" of the health service so treasured by Labour.
Mr Reid said Labour's plans would help to open up services previously confined to the wealthy to everyone, providing choice for all.
Tony Blair has already vowed to press on with the plans, which are opposed by many in the Labour Party.
Mr Reid said it was vital "to develop new, improved and more appealing ways" of delivering free health care.
He said Labour must become "pioneers of our time", and had embarked on the "greatest peacetime programme of improving the NHS".
He insisted that the foundation hospitals plan would remain true to Labour's values, proving faster treatment for all.
He said foundation hospitals would give local people the chance to control their own health providers, and would also expand capacity and give more power to patients.
Mr Reid insisted Labour's record on the NHS was one to be proud of, adding: "For the first time we are going to do even more. More than extra capacity. More than new systems. More than extra power and choice."
He said Labour was taking health services previous monopolised by those wealthy enough to afford them to make them available to everyone.
"It is the most extraordinary effort in history to help ordinary people out of pain," he said.
"These are our fundamental values, our fundamental purpose - the relief of human suffering, not in paper resolutions, but being put into practice."
He asked the conference: "If your child, or your mother was in pain, and the means to relieve it quicker were available, free at the point of need, would you refuse them it? I wouldn't.
"And if I wouldn't refuse that relief to my family, then I'm not going to refuse it to any other family in the country."
Earlier Mr Blair, who later faces further criticism over the Iraq war, said the "status quo won't do" when it comes to the way the NHS is run.
The prime minister insisted the foundation hospitals plan had come from healthcare professionals and was not imposed by Downing Street.
The prime minister acknowledged that he faced significant opposition over NHS reforms in particular from trade unions.
He insisted during an interview on BBC Radio 4's Today programme that Labour delegates in Bournemouth were prepared to listen, but it seems inevitable the government will press ahead even if the conference vote fails to back the policy.
There are a significant number of backbench Labour MPs who are worried foundation hospitals will have the effect of creating a two-tier health service.
But Mr Blair indicated he believed that the arguments about the issue were far from over.
"I think that people are perfectly willing to engage in a conversation as to whether foundation hospitals are indeed the right thing to do," he told the Today programme.
"We are making big changes in the way the NHS delivers its services but we now need to sit down and say 'how do we take it further'?
Mr Blair says health workers sparked the idea of foundation hospitals
"There's no doubt at all big change is happening but we need to go further because we need to persuade people ... the only way of delivering further change is further reform."
Under the government's proposals hospitals could opt out of government control and become independent not-for-profit organisations.
They would be able to borrow money on the private markets and set their own financial and clinical priorities.
They would remain part of the NHS and be monitored by stakeholder councils, whose members would be drawn from local communities.