Alan Milburn has warned nurses that pay rises will not be a "something for nothing arrangement".

The health secretary set out the government's plans for the NHS - but refused to yield to health workers' demands for "substantial" pay increases.

Milburn offered a straight deal to health workers; nurses taking on new roles were right to expect "a fair reward".

But nurses had a responsibility to deliver improvements in productivity and flexibility, he said.

"Investment in pay, just like every other area of future NHS spending, has to pass our acid test - it must contribute to expansion in NHS capacity, it must bring about increases in NHS productivity and it must deliver improved NHS performance," Milburn told the conference.

There was also a warning that it would take "time and effort" to bring in a new pay system.

The health secretary said it would happen faster if staffing unions were prepared to agree to changes.

He also gave more details about the performance-linked pay review scheme, saying that new "star rating" system will include an assessment of how well staff are treated.

Milburn admitted that recruitment will be vital - and stressed his plans include employing an extra 35,000 nurses for the health service by 2008.

Nurses have argued that improving wages will help retain and recruit the staff needed to deliver the improvements to the NHS that both Milburn and the chancellor are demanding.

He also gave an assurance that the NHS would not be recruiting from developing countries in response to criticism from aid charities that Britain was "poaching" vitally-needed staff from abroad.

The government is also set to launch a new helpline for nurses recruited from abroad by agencies who then exploit them by charging vast fees and offering "dead-end jobs".

Milburn said he was "appalled" by reports of exploitation and vowed to "match their skills to NHS jobs".