The NHS is over-politicised, a senior Labour peer close to Downing Street warned on Thursday.

A Kings Funds report, chaired by Lord Haskins, argues that the health service should be distanced from day-to-day politics.

"The NHS is not in crisis. It is not on the verge of collapse. But it does suffer from excessive political control, too much centralisation of power, and a lack of responsiveness to patients," he said.

The discussion paper will be closely examined by ministers, who are keen to remove the "potential conflict" between Whitehall and those delivering frontline NHS services.

One of Labour's first acts of government was to give independence to the Bank of England and a similar move on health could prove attractive to Downing Street.

Responding to the report, a Department of Health spokesman said: "This interesting report fits in very neatly with what health secretary Alan Milburn said last week. The NHS needs less interference from Whitehall and more freedom to get on with improving patient services."

The Kings Funds calls for "a new legislative settlement" for the health service "to create greater distance between the government and the NHS".

"An NHS corporation, at arms-length from government, could oversee national standards, local funding allocation, regulation and institutional learning. This would leave the secretary of state and health ministers free to focus on funding, setting the broad strategy for health and establishing an ethical framework within which policy and practice should evolve," says the report.

The King's Fund's chief executive, Rabbi Julia Neuberger, said: "The whole of the NHS should be freed from political control of its day-to-day workings. Local NHS organisations should be able to manage their assets without interference from the centre and without the constant threat of reorganisation. They should be accountable directly to the people they serve, both locally and through parliament".

The think tank says it is seeking "to move the debate away from methods of funding" to questions of patient choice.

"There is a need to extend opportunities for patient choice. The NHS has to recognise and harness growing consumer awareness in public services, and use choice to ensure that services develop in line with patient preferences," agues the report.