At a time when secondary care costs are rising more than double that of primary care, this would allow commissioners to establish whether hospitals are delivering more services or simply being paid more under Payment By Results, it says.

Dr Michael Dixon, NHS Alliance chairman, said: ‘The Blair administration abolished old fashioned prejudices between public and private and concentrated on support of whatever option is best for patients.

‘Equally, the issues over MPs' expenses and bankers' bonuses have changed the scene and the public want to know who is being paid for what - in public services that should be their right, especially at a time when we are looking at public ownership of banks and private ownership of some frontline NHS services.'

Dr Dixon added that it is not unusual for bidders to ask for more money after being awarded a tender at a price they cannot provide the service for.

‘We need a system that exposes bidders who are loss leading and using other tactics to gain market entry,' he added.