The prime minister has defended Labour's record in office and unveiled plans to accelerate reform in the NHS.

Tony Blair began his monthly press conference with a robust defence of the government's management of the public services.

"I believe we have done what we were elected to do," Blair said.

"There are real challenges, of course, that lie ahead for the government and for the country.

"But I would say after six years of office, Britain has the lowest inflation, interest rates and unemployment for decades."

He said that half a million children have been lifted out of poverty and pointed to "record investment in the National Health Service and schools".

"Crime is falling, and Britain is stronger in the world," he said.

The government's achievements were "real...and sustainable".

The prime minister delivered a defiant message to critics of the government's foundation hospital plan.

Despite continuing anger from public service unions and Labour MPs, Blair invited a further 38 hospitals to bid for foundation status.

"We are also extending the formal invitations to those three-star hospitals to apply to become foundation trusts," he said.

The announcement came despite intense backbench opposition to the proposed reforms.

The prime minister added that the public would judge the government on health, the economy, schools and crime at the next election.

As the government prepares to become the longest serving Labour administration, Blair said "reform and change" allied to investment was essential.

"There is an enormous amount still to do," he told journalists.

"It's reform and change which along with investment is responsible for the improvements we have seen."

Maximum waiting times in the health service had dropped from 15 months to 12 months and would reach six months by 2005, Blair said.

He also announced an expansion of the NHS diagnostic centres.

"We are planning that the new diagnostic and treatment centres will do around 300,000 extra operations by 2005 and 150,000 of those will come from the private sector," he said.

"We can expand this further, as John Hutton is setting out today, with plans for at least another 125,000 extra orthopaedic operations over five years, to be performed in the new DTCs."

Blair's announcement came as the Department of Health confirmed that the chief executives of all the NHS Trusts awarded three star status had been "encouraged" to apply for foundation status.

Health minister John Hutton sought to reassure opponents that the new hospitals would not alter the principles behind the NHS.

"I have little doubt that many of these trusts will see their three-star status as something to build upon and will clearly want to consider whether NHS foundation trusts status is right for them," he said.

"NHS foundation trusts will be firmly part of the NHS but will be locally accountable, free from Whitehall control and as a result better able to deliver responsive services to the communities they serve."

Liberal Democrat health spokesman Dr Evan Harris slammed the decision to accelerate the reform process.

"Foundation hospitals are a flawed and divisive idea. Opening up the number of foundation hospitals from 25 to all 63 three-star health trusts doesn't make it a better idea," he said.

"The basis for selection is arbitrary since it is now common knowledge that the star-rating system rewards bad practice and figure fiddling as much as anything else."