A private health insurance company has been forced to take down an advert from its website after it tried to sell its products by claiming that the NHS had been responsible for 13,000 needless deaths since 2005. The claim, made by Bestmedicalcover, was found by the Advertising Standards Authority (ASA) to have used an "appeal to fear to sell private health insurance and that it was not justified to do so".

The company, based in the British Virgin Islands, had cited a recent report by the medical director of NHS England, Sir Bruce Keogh, which it said had found that a "staggering 13,000" deaths in hospitals were likely to be due to negligence. The advert added that health insurance could "provide peace of mind" and "quite literally save your life".

The figures cited were not part of Keogh's report, which actually said it would be misleading to attempt to provide such statistics. But the claim that 13,000 people had needlessly died did appear in some newspapers' coverage of Keogh's investigation into 14 NHS hospital trusts in the days before the report was published.

Labour has claimed that Conservative spin doctors were behind a pre-briefing of Keogh's report, which led to the erroneous claims being aired in the public domain, an allegation denied by the health secretary, Jeremy Hunt.

The shadow health secretary, Andy Burnham, who will speak at a TUC rally on the NHS outside the Tory party conference on Sunday, has accused the government of running the service down in order to privatise its services.

The ruling by the ASA, due to be published after the Tory party conference but leaked to the Observer, said that it received 54 complaints about the advertisement. The ASA ruled that the advert must not appear again and E-Smart Media, the company trading under the Bestmedicalcover name, was told to ensure that it use "robust substantiation to support claims" in future.

One of the complainants, a senior doctor in the NHS, told the Observer: "The advertisement was a deliberate attempt to frighten vulnerable people into taking out unnecessary private health insurance. It misused dodgy statistics to attack the NHS and try and scare people into taking out insurance policies. It also suggested that patients using private care would run less risk of being contaminated by other patients. It is, unfortunately, typical of the current attempts to undermine the NHS and create profit-making opportunities for private-sector entrepreneurs."

Last week at the Labour party conference, Burnham, in a well-received speech to delegates in Brighton, said the coalition's Health and Social Care Act had put the NHS on a fast track to fragmentation.

He further claimed that the NHS was being privatised with huge private health firms run by people who had donated £1.5m to the Tories, winning £1.5bn in NHS contracts. He said that savings were being made by forcing the NHS to restrict patient treatment, a policy that would necessitate people having to pay hospitals for care.

New analysis provided by Labour show that 81 contracts of NHS services have been put out to tender or awarded to private firms since Hunt became health secretary just over a year ago. The total value of the contracts is worth around £4.5bn.

Last night Burnham said: "This unpleasant episode lays bare the depth of collusion between the Tory party and private health to undermine the NHS. The ruling exposes the cynicism of a prime minister who claimed to love the NHS when it suited his purposes but has since ordered his spin doctors to rip it to pieces.

"As a result of this ruling, the NHS is owed an apology from Bestmedicalcover and the Conservative party. They have been caught red-handed spinning against the NHS to advance their privatisation agenda."

E-Smart Media, which runs a number of websites offering to put people in touch with insurers, has twice before been forced to take adverts down from its website or been reprimanded by the ASA for sending unsolicited emails. It describes itself as a "leading provider of premium Leads for the Consumer Finance & Insurance industries".

The government denies that its changes to the NHS will open up the health service to privatisation. Earlier this year Hunt said that the controversial Health and Social Care Act had been introduced in order to allow GPs and patients to choose the best services to meet their needs.