A scheme to pay Oxfordshire doctors for not referring patients to hospital must not compromise GPs' duty of care, the Government has warned.

The Department of Health has written to the Oxfordshire health trust behind the controversial incentive scheme for family doctors, which has caused a national storm after being first reported in The Oxford Times.

Under the scheme, introduced by Oxfordshire Primary Care Trust, up to £1.2m is being handed over to GPs in bonuses to reduce the numbers being sent to hospitals.

But there have been mounting fears that the quality of care could be hit, with the chairman of the British Medical Association's GP Committee, Laurence Buckman, dismissing it as "morally dubious, ethically disturbing and quite wrong".

The Government has now stepped in, writing to local trusts to warn that incentive schemes similar to Oxfordshire's must not override the clinical needs of patients.

The incentive scheme in Oxfordshire was introduced in response to an eight per cent rise in hospital referrals, contributing to a feared PCT overspend of up to £23m.

The PCT says that 79 out of the county's 82 practices have already signed up for the scheme, which will earn GPs thousands of extra pounds if they can meet referral targets.

The Department of Health responded to concerns from patient groups and the BMA with a clear message to trusts that patient care must not suffer.

Dr David Colin-Thome, the Government's national director of primary care, tells trusts that they must be sure that incentive schemes must "improve quality and appropriateness of care for patients in the most appropriate setting".

Despite warnings from some specialists that payments to bring down referrals could result in patients being misdiagnosed, Oxfordshire PCT said it would be going ahead with its scheme.

A spokesman said: "Any patient in Oxfordshire who needs a hospital referral will get one."

But Jacquie Pearce-Gervis, of the Oxfordshire Patient Focus Group, said: "There is still considerable concern about this from people of all ages.

"People simply do not believe these payments are right.

"It is only thanks to The Oxford Times that this issue has been highlighted locally and nationally, otherwise people would simply have not known about what was going on."