The reforms would mean that patients who are denied a treatment by their local health service would be able to register instead with any health authority in the country that does provide the treatment.

The changes would end the situation where patients in some places are denied treatments such as cancer drugs or IVF that the NHS provides to patients living elsewhere. There has recently been outrage over the "postcode" provision of the breast cancer drug Herceptin, which means that women in some streets have been denied access to the drug but their neighbours have been given it.

The plans, which are to be adopted by the party’s Public Service Improvement Group, set up by David Cameron, would in effect introduce US-style health maintenance organisations or European-style social insurance schemes into Britain for the first time.

The policy group, chaired by Stephen Dorrell, a former health secretary, will unveil its proposals next month after the Conservative conference. The reforms suggested by the policy group are not binding, but the Shadow Cabinet are very sympathetic to them and they are almost certain to be adopted as official policy. Party leaders did not want the policy to be announced before the conference in case it distracted attention from the main messages.

The proposals, which go far farther than the Government’s moves to introduce patient choice in the NHS, were first outlined in a pamphlet called Designing the New NHS published by the King’s Fund health think-tank in June.

Patients would be allowed to choose their primary care trusts (PCTs), which manage local NHS budgets, pay for hospitals and doctors, and decide what treatments to pay for in their area. If patients are not satisfied with the treatment they receive through their local PCT, they could then switch to any other PCT, and the Government would then switch funding from their old PCT to the new PCT. The PCTs would then have to compete for patients in order to get central funding, just as insurers in the US or Europe compete for patients.

At present, patients are automatically covered by the PCT that covers their area and cannot switch even if it denies them lifesaving treatment.

"That would provide a powerful incentives for commissioners to perform," the King’s Fund study stated. "It would, in effect, create a form of competing, publicly funded health maintenance organisation in the UK. If commissioning is not strengthened, a poor quality market, with poor quality for patients, is virtually guaranteed."

The reforms would require radical to changes to the way the NHS manages its money, and controls would have to be introduced to curb potential abuse. PCTs would have to accept all patients that applied to them, to avoid "creaming off" the best patients. Likewise, patients would only be allowed to change PCT at most once a year, in order to stop them switching every time they seek treatment.

The Government is already introducing some measure of patient choice, allowing patients some discretion over hospitals and doctors. In reality, however, the choice that a patient has is tightly constrained by their local PCT, which often bulk-buys treatment in contracts with local hospitals, or simply refuses to pay for treatment altogether.

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