A campaign to halt the government's drive to commercialise the NHS is being launched today by the former Labour health secretary Frank Dobson with the support of leading figures from the British medical establishment.

In a letter to the Guardian that is likely to form the focus of dissent at the Labour conference in Brighton next week, they say that reforms being introduced by the health secretary, Patricia Hewitt, threaten to destroy the character of the NHS by forcing hospitals and health professionals to compete with each other. The timing of the letter is clearly designed to foment a revolt in Brighton, where Dave Prentis, general secretary of the public service union Unison, intends to move a resolution on Wednesday calling on the government to "suspend any further expansion of the role of the private sector into the NHS". The union was busy mobilising support yesterday among unions, MPs and constituency parties, predicting that victory for its motion could become the main flashpoint of the conference.

But the campaign's reach extended beyond the Labour movement, with supporters of the letter including 19 professors of medicine and related disciplines, senior figures from the British Medical Association, and the poet laureate, Andrew Motion. It was also signed by Mr Prentis, the former cabinet minister Clare Short, and authors Philip Pullman, Claire Tomalin and Nick Hornby.

The letter came as the BMA published a survey of NHS medical directors across England suggesting that a third of NHS trusts are preparing to reduce services to avoid a debt crisis. The letter said: "Forced market competition will break up the NHS as a collaborating network ... There will be winners and losers, with some units and even entire hospitals having to close ... The NHS must be kept in public hands ... We call on organisations, healthcare workers, patients and public to campaign to protect the NHS from further privatisation and fragmentation."

Mr Dobson said: "The government's policy of promoting competition within the NHS and franchising services out to the private sector is gathering momentum day by day. Before long we will have a health insurance system and the NHS's role as a provider of care will be limited to picking up the difficult cases and looking after the worst off. There is great concern in the Labour party throughout the country about what is happening - and it is shared by more than 1m NHS employees. It is time we worked together to put some chocks under the wheels of this fashionable bandwagon."

The BMA's analysis of NHS cuts was based on a survey of 530 medical directors in England. On the basis of 120 replies, it said 73% of trusts face a funding shortfall in the current year. The required savings averaged £6.2m per trust. Almost half were proposing a recruitment freeze and 27% were considering redundancies. Some trusts are also intending to close beds.

The BMA said medical staff would be included in recruitment freezes in almost half (47.9%) of cases where this was being considered, with 14% saying redundancies would also include medical staff.

Paul Miller, chairman of the BMA's consultants' committee, said: "It is hard to understand why, at a time when the government has invested unprecedented funding in the health service, trusts may have to lay off staff and close wards. Something is going terribly wrong when patients pay the price for these financial problems and the government's lack of joined-up thinking ... It is madness to guarantee private providers huge volumes of work, often at a higher cost than the NHS, while NHS hospitals are deprived of essential funding."

The NHS Confederation, representing managers and trusts, said the BMA's findings should be treated with caution, since less than a quarter of medical directors replied to the survey.

· Read the letter here.