The Welsh Ambulance Service should be scrapped and new local health boards take over its work, says Plaid Cymru's health spokesperson Helen Mary Jones.
She said it would free money for services and improve response times.
The ambulance service declined to comment, and Tories accused her of "grandstanding" at Plaid's conference.
The Welsh Assembly Government - in which Plaid is in coalition with Labour - said it had not had the opportunity to study the proposals in detail.
Ms Jones, the Assembly Member for Llanelli, made her call at Plaid's autumn gathering conference at Llandudno, Conwy. Although Plaid and Labour are in coalition, a Labour minister has responsibility for health.
Ms Jones said the structure of the ambulance service had been unable to get to grips with the problems over the past two years and that more radical proposals should now be looked at.
The plan would cut back on what she called the "expensive bureaucracy" in administering the ambulance NHS trust, which includes an annual salary of £119,000 for its chief executive.
"I believe that we have persisted with the current set-up for long enough, yet we're still seeing response times that are well below what is acceptable in some areas," Ms Jones said.
"The establishment of the LHBs (local health boards) throughout Wales offers us a very real and viable option for the future of the ambulance service.
"Ambulances could be co-ordinated on a far more local level to ensure that the health authorities have to work in a joined up way."
She admitted it would mean a "big change to the way our ambulance services are run", and said that putting a new regime in place is "currently a daunting task".
Huge financial pressures
But she added: "This national institution hasn't worked - now is the time to bring responsibility back down to a local level."
Ms Jones, who will raise the issue at the party conference on Saturday and she said she believed it was just one example of Plaid thinking differently.
"As we know, our public services currently are under huge financial pressures and this is a level of expensive bureaucracy that we could do without."
She warned: "If we do not grasp this nettle now then I fear that the response time will continue to be too high and lives could be put at risk."
Conservative health spokesman Andrew RT Davies said the health minister [Labour's Edwina Hart] "enjoys her position through the support of Plaid Cymru, being one half of a coalition government".
Mr Davies went on: "The very same minister is on record as saying she is 'sick of answering questions about the Ambulance Service".
"If Helen Mary Jones as a member of the governing coalition has some wonder plan to address the disappointing response times for emergency ambulance calls here in Wales, the government should get on and implement such a plan."
He accused her instead of choosing "grandstanding at some end of the pier show that is Plaid Cymru's annual political gathering. What the people of Wales want is action not rhetoric."
A Welsh Assembly Government spokesperson said: "We haven't had an opportunity to study in detail the proposals that Helen Mary Jones is suggesting.
"Ambulance service performance is improving however, with the latest figures showing that 64% of emergency responses arrived within eight minutes.
"The minister has had many discussions with the service about further improving response times."