The hospital trust has an annual budget of �650m

The trust in Leeds which runs the city's General Infirmary and St James's Hospital is �16m in debt.

In order to deal with this, bed numbers could be reduced by up to 240, four operating theatres could be closed and there may be a freeze on recruitment.

Health mangers say the cuts can be made without reducing the quality of care at the hospitals.

Annual budget

Neil McKay, the chief executive of Leeds Teaching Hospitals NHS Trust said the problems date back to when the trust was formed in 1998.

He pointed out that the �16m deficit had to be seen in the context of an annual budget for the two hospitals of �650m.

"We operate over 3,000 beds," he told BBC Look North, "so the closure of up to 240 only represents 7% or 8% of that total."

Mr McKay went on to say that no nursing staff will lose their jobs and the trust was striving to do more operations as day care surgery.

The plan to deal with the deficit will be discussed by management and unions on Thursday.