There is no endless flow of money. We cannot do everything we would like as quickly as we would like

Dr Liam Fox

"It will be welcome and allow a vital expansion of our healthcare. But it will not be enough in itself.

"If we want to see total spending on health care brought up to European levels we will need to see the private sector increase as well as the NHS."

Dr Fox said the party would "shake-up" the insurance market to make it easier and more attractive for patients to sign up for cover.

He said they would also work to abolish taxes on health insurance.

"To be blunt, the private sector needs a shake-up. Too many products for individual private health care are too expensive, inflexible, with too many exemptions and covering you for anything except anything you have ever had."

He added: "We must not back away from the challenge to make private health care more attractive in addition to the extra NHS spending."

Waiting lists

Dr Fox said the Tories would make heart and cancer services a priority.

He said the party would abolish waiting list targets to ensure hospitals did not put minor cases ahead of lifesaving treatments in an effort to cut waiting list numbers.

Dr Fox also pledged to take politics out of the NHS.

"Only a fool would believe that you can run a service that employs almost a million people from behind a Minister's desk in London.

"It is crazy to believe that one person can tackle the different and detailed health needs of Penzance, Preston and Peckham with a single 'one size fits all' solution."

This latest announcement exposes the real Tory agenda as a privatising agenda

Alan Milburn, Health Secretary

Mr Fox told party members that they had to be honest about what the country could and could not afford.

"We have a great challenge ahead in the debate on health - to tell the truth.

"There is no endless flow of money. We cannot do everything we would like as quickly as we would like."

Labour criticism

However, Health Secretary Alan Milburn criticised the plans.

"By confirming that public funds would be taken out of the NHS to subsidise the private medical insurance market, the Tories have fatally undermined any claim that they could match Labour's record extra spending on health," he said.

"This latest announcement exposes the real Tory agenda as a privatising agenda which would create a two-tier health service in Britain where people were pushed to the back of the queue unless they were able to pay."