A university department responsible for training nurses and midwives for local hospitals is to be a victim of NHS cutbacks.

Oxford Brookes School of Health and Social Care, which has trained hundreds of nurses, midwives and occupational therapists since being created in 1997, confirmed it is grappling with a major drop in income.

The school, one of the largest at the university, will have £1.2m less to spend a year by 2008. And it has confirmed that 17 jobs, mainly in teaching, are to go.

The school, based in the spacious grounds of the former Milham Ford School in Marston Road, said its problems resulted from national changes in NHS payments to train nurses and health professionals.

Dean June Girvin pledged that the cost-cutting would not affect the numbers of nurses and health workers trained, or the standard of teaching.

She said the school had suffered from the introduction of a national benchmark, to ensure a standard national payment to teach health professionals. Previously payments were negotiated locally and the school received more than the national average.

The dean said the drop in funding was in no way connected to the current financial problems facing the NHS. She said the school hoped to avoid compulsory redundancies and paid tribute to staff for working to minimise the impact of the cuts on students.

In a statement, the school said: "By September this year, we will have made the necessary reductions in costs, which include reductions in the number of staff. It is to the credit of the school's management that these plans have been put in place without making compulsory redundancies.

"Although the reduction in funding to train nurses remains disappointing, we have worked closely with the Thames Valley Strategic Health Authority and our local NHS partners.

"We will be receiving in the region of £800,000 less over a period of three years for our nursing, midwifery, occupational therapy and physiotherapy students.

"There will be no impact on the students' learning experience and the school has carefully considered ways of working differently to try to minimise the impact on staff workload."

Brookes created its School of Health and Social Care eight years ago, following a merger of the Oxford Radcliffe School of Nursing, formed in the 1920s, and the School of Occupational Therapy.

The school currently trains 141 adult nurses, 22 children's nurses, 25 mental health nurses, 21 learning disability nurses, 14 midwives, 48 physiotherapists and 27 occupational therapists a year.

The school has achieved significant fundraising success, raising £4m towards its facilities in Marston Road, to create what is now one of the country's leading healthcare training schools.