The NHS would need to slash its workforce by 10% to help meet savings targets of £20 billion by 2014, it has been reported.
A study carried out by consultancy firm McKinsey and Company, said the workforce would need to be cut by around 137,000.
The report said that clinical staff as well as administrators would have to go.
A number of recommendations were made, including a reduction in medical school places from October, a recruitment freeze starting in the next two years, and an early retirement programme to encourage older GPs to make way for younger generations.
The study said £2.4 billion could be saved if hospitals with the lowest levels of staff productivity got up to nearer the national average. And it added that around 40% of patients in a typical hospital do not need to be there at any one time.
Shadow health secretary Andrew Lansley said: "It is extraordinary that Labour plan to take an axe to the hospital budget rather than to the bloated health bureaucracy."