Waiting list pressures are leading to short-termism, the report found

The Audit Commission assessed every trust in England to see if they are meeting targets set out in The NHS Plan, published in July 2000.

It found that while progress was being made in some areas, particularly patient waiting times, trusts were failing to meet many other key objectives.

More than half of the trusts in England had been diverting money away from future projects, such as buying new medical equipment, in favour of quick fixes to keep services going.

Having too many targets risks obscuring where the real priorities lie Audit Commission One trust's battle to meet targets

As a result, the commission warned, recent improvements in the NHS may not be sustainable.

It also said there were too many piecemeal targets which obscured the real health care priorities.

It called for fewer targets, and for ministers to allow NHS managers and medical staff to be left to decide how best to achieve them.

The Audit Commission assessed the performance of every trust in England At a glance

Shadow Health Secretary Dr Liam Fox said ministers "should be alarmed" by the report.

"Ministers must now surely tackle such problems as care for the mentally ill and the elderly, the widespread damage caused by the obsession with targets and the financial crisis gripping organisations throughout the NHS."

The NHS Confederation, which represents health service managers, backed the report's calls to change the way progress in the NHS is measured.

Dr Gill Morgan, its chief executive, said: "We believe that many of the targets have helped to concentrate efforts and that genuine improvements have been delivered as a result.

"But we do need a new approach to setting and measuring targets to ensure we encourage real innovation and a focus on long term sustainable change."

A&E targets

But Sir Nigel Crisp, chief executive of the NHS, criticised the two-year study.

"It is a snapshot report and in most cases the NHS has moved on. The health service is turning the corner. The resources and reforms are biting. The NHS Plan is well on track."

It is a snapshot report and in most cases the NHS has moved on Sir Nigel Crisp, NHS chief executive Q&A: What the report found

The report raised questions about government claims that its A&E targets are being met.

Figures released in March suggested 85% of A&E units were treating 90% of patients within four hours.

However, the Audit Commission said just 30% of A&E units were on course to achieve this.

The report has also found that government plans to improve services for people with mental health problems and the elderly may be running into trouble.

Many were having problems implementing the 2001 guidelines for the care of older people and the 1999 guidelines for mental health care, including half of mental health trusts, it found.

Top trusts, weak finances

And it questioned how the Department of Health rates hospital trusts. The department looks at factors such as how long patients wait for treatment, but does not include management or finances.

The commission said many top-rated trusts in fact had serious management problems, while some of those trusts with zero stars had strong management and finances.

It said failure to address management or financial problems could lead to some trusts running up huge deficits or even going bust in the future.

James Strachan, Audit Commission chairman, said: "A more robust procedure for ranking hospitals is needed, focusing on management and financial capacity as well as patient care.

"Without this there is a real risk that the value of billions of pounds of new public money earmarked for nascent structures like foundation trusts will not be maximised."