60 Labour MPs join rebellion

Up to 63 Labour MPs last night defied Tony Blair's direct appeal to back the government's blueprint for free-standing non-profit NHS hospitals in one of the biggest domestic rebellions since Labour was elected in 1997.

But the revolt failed to defeat Alan Milburn's health and social care bill despite repeated attacks from all sides during a heated six-hour debate.

After a critical Labour amendment was defeated by 299 votes to 117 - mostly Labour plus Liberal Democrats and nationalists - the main motion was carried by 304 to 230 with around 30 Labour MPs joining the Tories and other critics, but many more abstaining.

It cut the government majority to 74 and critics promptly protested that ministers won only on the votes of Scottish and Welsh Labour MPs whose constituencies are not affected by the bill.

The leftwing Campaign Group promised to "wreck" the bill during its later stages. Frank Dobson, the former health secretary, predicted that the controversy would prove "a running sore in the NHS, the Labour movement and trade unions".

Last night's rebel amendment - moved by the Labour MP David Hinchliffe, and condemning the bill as bureaucratic and likely to create a two-tier structure as the best hospitals surge ahead - was defeated after frantic appeals for loyalty, and some concessions, which failed to quell doubts.

Former ministers lined up on both sides of the ideological divide. Robin Cook and Stephen Byers backed Mr Milburn's insistence that foundation hospital trusts are vital to ensuring that £40bn of extra money for the NHS is spent efficiently on customer-friendly healthcare.

But their support was offset by a scornful attack by Mr Dobson and Geoffrey Robinson, a close ally of Gordon Brown, who has voiced strong doubts in public and private.

After Mr Dobson had condemned the "dog eat dog" bill, Mr Robinson, the former Treasury minister, endorsed the widespread complaint that the Milburn model for localised, democratic control of hospitals was "not terribly clear".

If yet more NHS reorganisation has to take place, ministers should first democratise GP care via the new primary care trusts, Mr Robinson argued. Many Labour and Tory MPs, including another former health secretary, Stephen Dorrell, agreed.

Mr Milburn, who faced repeated detailed challenges from hostile and wavering Labour MPs during his speech, was also taunted by the Conservative spokesman, Dr Liam Fox. "We wanted to see real foundation hospitals with real freedoms to borrow, real freedoms over pay and conditions, real freedom from government interference," Dr Fox told MPs. "Foundation hospitals cannot borrow freely, they cannot set their own pay and conditions, they will be run by a regulator entirely controlled by the secretary of state."

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