One of Britain's most prestigious teaching hospitals is set to close as a result of huge debts created by more NHS patients being treated in private centres, as well as soaring building maintenance bills.

Charing Cross hospital in west London would shut down and its services move to its sister hospital, the Hammersmith, but senior health officials will not discuss them publicly until after the election. Consultants at both hospitals were told of the plans last week, but were warned by their chief executive that it would be officially denied if the plans emerged in the run-up to polling day.

The closure proposal could have a huge impact on a marginal Labour seat of Hammersmith and Fulham, where the party has a majority of just over 2,000. Its standing MP, Iain Coleman, is standing down and its new candidate is Melanie Smallman.

Shadow health secretary Andrew Lansley said it was essential that local people were consulted fully on the plans. 'If there are plans being worked on, then it is not the job of the NHS to suppress information, even if we are coming up to a general election. It isn't necessarily the case that creating one super-hospital on one site is the best way forward. The NHS has to be responsive to the needs of patients and GPs and to have a proper conversation with them about what they want to see.'

The Charing Cross hospital, a 19-storey block in Fulham, was opened 32 years ago, but faces looming financial difficulties. It is part of the Hammersmith Hospitals NHS Trust, which has run into debt as a result of attempts to attract many more surgical patients. Three years ago it bought a private hospital, Ravenscourt Park, to carry out thousands more hip and knee operations. However, it was left with hundreds of empty beds - and projected debts of up to £37 million - because many patients were sent instead to private treatment centres by their GPs.

Charing Cross, with 627 beds, provides highly specialist care in neurosciences and cancer as well as accommodating the Kennedy Institute of Rheumatology. It is also one of the main teaching centres for Imperial College. But the building already has serious structural problems and will cost an estimated £100m to upgrade.

A statement from the hospital yesterday read: 'We have been looking at the capital investment programme for the next 10 years and expect to have to spend up to £400m on renewing our estate. With that level of investment, we have to look at all the options available to us to demonstrate that what we're planning is the best way of spending public funds. We are looking at options at the moment, but as yet have no plans, so have nothing yet to consult on, and are unlikely to have for some time yet.'

Consultants were told at a meeting last week that the tower block which houses most of its services is set to be demolished .The site, in a prime site close to the Thames could be sold for a great deal to housing developers. Services would then move two miles north to the Hammersmith Hospital site, where new buildings would be needed for the expansion.

It is even rumoured that Wormwood Scrubs prison, which occupies a large piece of ground alongside the Hammersmith hospital, may be sold off by the Home Office and that the Victorian building would be rebuilt to accommodate most of the Charing Cross wards and departments. The Home Office, however, has firmly denied any intention to sell off the prison.

Last Monday, consultants at both hospitals were called into a meeting with Derek Smith, chief executive of the Trust. Smith, the highest paid executive within the NHS on a salary of £210,000, explained that they had to produce plans for a reconfiguration of services, because the costs of maintaining the status quo were too high. It would cost £100m simply to make the Charing Cross site completely safe - the ageing concrete and its system of air ducts makes meeting fire regulations difficult.

On his desk Smith had architects' drawings, which suggested to those present that the plans were more than the beginnings of a proposal.

A consultant who was at the meeting said: 'We were left in no doubt that closing the Charing Cross and rebuilding the Hammersmith was really the only realistic possibility. Derek explained that it couldn't be announced before an election; in fact he said that he would deny it if was put to him.' The doctors left with the understanding that the plans would be unveiled in June. There will then have to be a full-scale public consultation before any changes can be made.

The trust has hit a number of financial difficulties over the past year. By the end of March, the official figure stood at just £5m in the red but some staff have been told that they need to make savings of around £25m this year. Last autumn, it had to start restricting admissions because the bodies holding the purse strings, the primary care trusts, were themselves in deficit.

But many of their problems stem from a decision three years ago to buy Ravenscourt Park for £14m with the aim of tackling the long waiting lists for hip and knee operations across west London. The number of patients they predicted to use the service did not go there, and earlier this year it had to close one ward and just 40 of its 116 beds were being used.

Several doctors think it is a good idea to move all the services onto one site. Professor Charles Coombes, head of cancer services, said: 'The real question is how you maximise the benefits for the patients of all the new treatments that are being developed. If you have one third of your cancer patients treated on one site, and two thirds on another site, it really is not ideal.'

Clive Soley, Labour MP for Ealing, Acton and Shepherd's Bush, whose constituency includes the Hammersmith hospital, said it made great sense to have all the cancer services in one place as it would house world-class facilities. But he added: 'I don't anticipate that the whole of the Charing Cross site will be sold off, even if the tower has to be knocked down. That land would only raise around £50m on the market and prove hugely expensive to move everything off it.'

But others are worried about whether services will be protected if the Charing Cross tower really does disappear. It is likely that as a major accident and emergency centre some kind of casualty cover would have to be maintained there.

John Lister, of the health watchdog London Health Emergency, said: 'People in south-west London will be horrified by this proposal. There has been no open discussion, and we know that any hospital rebuilding always costs many millions more than the original predictions.

'We may be coming up to an election, but wouldn't this be a suitable time to discuss what kind of hospitals we want to see in the future?'