Health Secretary Jeremy Hunt has agreed to review controversial new rules opening NHS services up to competitive tendering to allay concerns among his Liberal Democrat coalition partners, it has emerged.
The development came after Labour claimed that a rift had opened up between Mr Hunt and Lib Dem care minister Norman Lamb on the issue while a senior Lib Dem MP urged the Health Secretary to go "back to the drawing board".
Shadow health secretary Andy Burnham described it as "another humiliating U-turn" for the Government and accused David Cameron of attempting a back-door privatisation of the NHS.
The passage of the Health and Social Care Act caused deep divisions within the coalition, with particular concerns from the Lib Dems over the role of the private sector and the creation of new markets within the NHS.
Now, there are fears of a fresh rebellion at the Lib Dem spring conference in March unless Mr Hunt rewrites the NHS (Procurement, Patient Choice and Competition) Regulations which implement a key part of the act.
The regulations would bar "any restrictions on competition that are not necessary" and could make it easier for independent providers to get contract decisions overturned if they feel they should have been open to tender.
A source close to Mr Hunt confirmed that Lib Dems had voiced "concerns" over the potential impact of the regulations and that he had agreed to look at their worries.
"Lib Dems are concerned about how the regulations could be interpreted," said the source. "We are working with them to try and find a solution."
Mr Burnham said: "David Cameron has been caught out trying to force through privatisation of the NHS by the back door.
"This is another humiliating u-turn to add to the Government's list but we believe ministers will stop at nothing to drive through their plans to put the NHS up for sale to the highest bidder."