Extra investment in the NHS should be directed towards hospitals that prove effective at managing existing resources, the Audit Commission has said.

Many NHS trusts could improve their performance if they managed their budgets more effectively, according to the spending watchdog.

Publishing a series of reports on acute hospital performance, the commission called for managers and doctors to work together to improve the delivery of patient care.

The studies found that a willingness to try new approaches and change behaviour could lead to the better use of existing resources.

The commission said that regional variations in willingness to reform accounted for the large and often unexplained variances in the way hospitals deliver their services.

Although some of the differences could be put down to varying levels of investment or informed local choice, there is still considerable scope for better management of existing resources, said the watchdog.

Noting that often simple solution can lead to better services, the commission also warned that extra investment in hospital capacity should only be provided where existing resources are being used as effectively as possible.

"We support the need for additional resources and freedoms in the NHS, but call on the government to ensure that trusts can demonstrate that they make the best use of their existing capacity before being allocated extra resources," said James Strachan, chairman of the Audit Commission

Among the issues highlighted in the reports were that one fifth of trusts admitted some emergency patients to areas that did not have proper ward facilities, while "management reasons" caused around 12 per cent of outpatient appointments to be cancelled.

And one in four trusts in England and Wales used their operating theatres for just 65 per cent of the time they had planned

Better management systems were a key area for improvement, the reports found.

In operating theatres around 30 per cent of units could not provide basic data directly from their computer systems, said the watchdog.

A Department of Health spokesman said the reports showed the NHS was "making progress".

She said there were more doctors, nurses, and beds in the NHS and waiting times were falling across the board.

"But we recognise that there are still improvements to be made," she said.

"We need to continue to invest in the NHS and reform the service, to ensure these improvements are made across the NHS and for the long term."