Labour Party members from Oxfordshire yesterday dealt a humiliating blow to the Government's NHS reforms.

Delegates at Labour's annual conference in Manchester backed a motion by Oxford West and Abingdon Party demanding a halt to "the headlong rush to a competitive system".

The embarrassing defeat followed a speech by Oxford member Paul Flather, who took to the stage to demand Health Secretary Patricia Hewitt put the "soul" back in Labour and give health trusts more time to sort out their financial problems.

The pace of change towards a system in which hospitals vie for patients and get paid by results has been blamed for putting hundreds of jobs at risk in Oxfordshire as health trusts battle to cut their debts.

Labour members are furious that, despite record investment in the NHS, 29 hospital staff have been made redundant in the county so far this year as managers follow Government orders to reduce a £33m deficit.

Oxford Radcliffe Hospitals NHS Trust said earlier this year that 500 staff could lose their jobs, 200 by the end of 2006.

Mr Flather told delegates he was "so proud" of the extra investment in the health service by Government, which had helped cut waiting lists and buy better hospital equipment.

But he said: "My party (in Oxford) has asked me to raise their concerns in Manchester. There is a clear perception that the NHS is in difficulty."

The pace of reform was "hurting patients, hurting staff and hurting Labour". Mr Flather urged Ms Hewitt to give hospital trusts, such as those in Oxfordshire, "time to make adjustments otherwise we will lose services with rushed stop-gap decisions".

Mr Flather warned: "This doesn't look to me like a party of soul to aspire to.

"We understand that markets can bring benefits, but not unfettered, not unregulated, not without soul."

The motion, co-authored by public service union Unison, read: "Immense damage is being done to some local services because of deficits and the breakneck speed of change.

"Across the country, patients are facing cuts in valued local services and in staffing levels as some local trusts struggle to balance their books... where such cuts are being made, local services are suffering."

The motion also criticised the extension of the private sector's involvement in the NHS and pointed to the controversy over Netcare's underused mobile cataract service in Oxfordshire as an example of why it could be poor value for money for taxpayers.

Mr Flather, a fellow of Oxford University's Mansfield College, said Ms Hewitt was under obligation to take notice.