Union leaders have warned that Oxfordshire's NHS is a step closer to breaking up after an Oxford hospital yesterday (February 13) received the green light to continue its bid for foundation status.

Managers at Oxford's Nuffield Orthopaedic Centre were "delighted" after finally winning clearance from Health Secretary Dr John Reid, allowing them to take their application to the Foundation Hospital Independent Regulator.

But Unison fears the decision will affect patients and staff, because the increased bureaucracy needed to set the system up would leave less cash for basic care and treatment.

Mark Ladbrooke, chairman of Unison's Oxfordshire Health Branch, said: "Clearly this is a shame, the start of the break-up of the NHS and an indication of internal markets being formed within the health service."

The NOC in Windmill Road, Headington, was one of the first 25 hospitals to bid for foundation status after winning the maximum three stars in the NHS rating system in 2002. But last month there were fears it would be unable to transfer to the new system by the April start date, because it was the only one not given the thumbs-up by Dr Reid.

The NOC said the delay had been caused because Department of Health staff believed the trust may have been "over-cautious" about its financial projections, drawn up as part of a five-year plan.

Chief executive Ed Macalister-Smith said the application process had helped identify where the trust needed to make improvements.

He said: "We're delighted the Secretary of State has given us the go-ahead and that our bid for foundation status is now one step closer to becoming a reality."

Hospitals that win foundation status will have more freedom, away from Whitehall control, be able to obtain money from the private sector, and be overseen by a group made up of the public, patients, staff and other organisations.

Although critics fear the system will cause a two-tier health service, Dr Reid wants all NHS trusts to change to foundation status within the next few years.

Commenting on his decision, Dr Reid said: "This is good news for the trust and all of the patients it serves. The trust will now have the opportunity to give local people more say over how their hospital is run and greater control over the services it offers.

Independent regulator Bill Moyes has said he will only give final foundation status approval when he is satisfied about each trust's preparedness and viability.