NHS consultants are set to reject a new contract in a major setback to government reform of the health service.

After almost 18 months of negotiations and an average pay rise offer of 15 per cent, consultants are expected to have turned down a deal aimed at cutting hospital waiting times to a minimum of six months by 2004.

The result of a postal ballot is expected on Thursday.

New working conditions would have boosted consultants hours for the NHS by 14 per cent and curbed the amount of time top doctors spend working in private practice.

Many consultants are set to quit the NHS and set up private barrister-style chambers to sell their services back to the hospitals at premium rates.

The development will be a major setback for health secretary Alan Milburn - and for the British Medical Association which negotiated the package.

Gordon Brown's tax hike to fund the NHS has been linked to reforms and consultants' rejection of more flexible hours could put back a deal until after the next general election.