Tens of thousands of job cuts and a three-year pay deal, starting with a low or zero increase for 2008-09, are strong possibilities, as the Department of Health wrestles with booming staff numbers and mismanaged pay deals.

Consultants, GPs, nurses and other NHS staff have all had pay increases, some huge, while a rise in staff numbers greatly exceeds that envisaged in the NHS Plan of July 2000.

Documents leaked to the Health Service Journal predict a sharp reduction in the workforce this year, cutting staff by 2.7 per cent, or 37,000 jobs.

Kevin Coyne, of the Amicus union, which represents many NHS staff, said: “This leaked document appears to confirm all of our worst fears. The report of job cuts runs counter to all of the Government’s claims about their commitment to the future of the National Health Service.”

NHS staff numbers have risen hugely in recent months. Patricia Hewitt, the Health Secretary, told the Commons Health Committee last year: “The NHS target for hospital doctors was to get to 74,590 by 2007. By 2004 the NHS was already employing over 78,000 hospital doctors and by 2005 over 82,000.”

Professor Nick Bosanquet, of the think-tank Reform, said: “For an organisation with a problem of financial balance and a pressing need to invest in new services, the recruitment of an additional 270,000 staff since 1999 represents a significant policy failure.”