More than 130,000 NHS workers would have to be axed for the NHS to meet its savings target of £20bn, it has been reported.
If efficiency savings were to be met by 2014, around 10% of staff – 137,000 – would have to go, according to a study by consultancy firm McKinsey and Company.
It said clinical staff would be dismissed alongside administrators.
In a bid to stop the cull, the report recommends a recruitment freeze starting in the next two years, and an early retirement programme to encourage older GPs and community nurses to make way for fresh staff.
The report was presented to the Department of Health in March and has caused a stir among senior managers.
If hospitals with the lowest levels of staff productivity got up nearer the average, £2.4bn could be saved, according to the study.
It added that in a typical hospital almost 40% of patients do not need to be there at any one time.
Shadow Health Secretary Andrew Lansley said: "Clearly, we need to get better value for money from the NHS, so we applaud any drive for greater efficiency, but it is extraordinary that Labour plan to take an axe to the hospital budget rather than to the bloated health bureaucracy."