EMBATTLED Tony Blair suffered another blow last night when scores of Labour MPs rebelled against the Government's flagship health service reforms.

Sixty-two Labour MPs joined a Commons revolt against the introduction of foundation hospitals.

Ministers saw their majority slashed to 35 as a rebel amendment to eliminate foundation hospitals from the Health and Social Care (Community Health and Standards) Bill was only defeated by 286 votes to 251.

Among the Labour rebels were Frank Cook (Stockton North), Bill Etherington (Sunderland North), Doug Henderson (Newcastle North) and Gerry Steinberg (Durham City).

It is thought to be the smallest Government majority in a Commons vote since Mr Blair came to power.

Although the number of rebels was slightly smaller than a previous revolt by 65 Labour MPs on the same issue, many Labour MPs apparently stayed away rather than back the Government.

The rebellion took place despite a flurry of last-minute concessions by ministers.

With the legislation still to go to the House of Lords, ministers know that they are not out of the woods yet.

Both the Tories and Liberal Democrats oppose the measure and the scale of the Commons revolt will encourage further attempts to block the scheme in the upper chamber.

Mr Blair - already facing growing anger over his justification for the Iraq war - also received a warning that critics of the plan within the party would step up the opposition. Public service union Unison vowed to take the fight to "the heart of Labour" at the party's annual conference in October.

"We don't want to see a two-tier health service and its clear that many MPs don't want it either," said Unison's Karen Jennings.

"The Government is in for a bumpy ride over the summer as opposition swells."

In the Commons, Health Minister John Hutton tried to reassure critics with a series of Government amendments. All hospitals would have the chance to apply for foundation status, the accountability of the independent regulator would be strengthened and new NHS pay arrangements would apply to foundation trusts.

However, former health secretary Frank Dobson said that the Government had failed to address the fundamental objections of the critics and warned that foundation hospitals would lead to the return of a "dog eat dog" culture in the NHS.

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