The government was accused of "breaking up" the NHS after announcing a downgrading of accident and emergency and maternity services to deal with huge financial losses at a Trust which went into administration.
The changes at Lewisham Hospital in south-east London are part of a wider shake-up of services in the capital after the financial collapse of neighbouring South London Healthcare NHS Trust (SLHT).
Protesters campaigning to save Lewisham Hospital
Health secretary Jeremy Hunt told MPs he had rejected proposals to close the A&E unit at Lewisham, where thousands of people marched at the weekend as part of a campaign to keep it open.
Lewisham Hospital has been hit by the knock-on effects of the financial difficulties of SLHT, which Mr Hunt said would now be dissolved after losses of more than £1 million a week.
Shadow health secretary Andy Burnham said the government's "mismanagement" of the NHS had got worse, adding that the decision to downgrade services set a "dangerous precedent" for other hospitals.
Rehana Azam, national officer of the GMB union, said: "This government is now presiding over the downfall, break up and privatisation of the NHS.
"The basic principles of NHS provided free at the point of use and delivery has been tarnished as Secretary of State Jeremy Hunt takes on recommendations to shut down services.
"As people will have to travel further to access services, particularly urgent care in built up areas with congested roads, lives will be put at risk."
The GMB called on MPs to reject today's decision.
Jeremy Hunt gives his statement on the South London Healthcare NHS Trust in the Commons
Geoff Martin, chairman of campaign group London Health Emergency, said: "The government have today endorsed brutal cuts to front line hospital services in south London which will have a knock-on effect for hundreds of thousands of people seeking emergency and maternity care.
"The minister has also given the green light to a wave of similar cash-led A&E and maternity closures and downgrades across London which will devastate services throughout the capital and spark an unprecedented campaign of public resistance."
Mr Hunt said he recognised the sense of "unfairness" people in Lewisham felt because their hospital has been caught up in the financial problems of its neighbour, but added: "However, solving the financial crisis next door is also in the interest of the people of Lewisham because they too depend on the services which are currently part of South London Healthcare Trust."
The minister said he had accepted the recommendations of a review by NHS medical director Sir Bruce Keogh that Lewisham should have a smaller A&E service.
The department will continue to see up to three-quarters of those currently attending A&E, he maintained, adding that the maternity unit at Lewisham will be replaced by a midwife-led facility.
Chris Hopson, chief executive of the Foundation Trust Network said: "South London Healthcare was a crucial test for the NHS and the Secretary of State. We must have a robust and effective way of dealing with hospitals that are no longer clinically or financially sustainable.
"Jeremy Hunt's decision is the right one, not least because it is based on the clinical evidence. It is a fair and balanced assessment of what is needed for the people of south London, and shows that Mr Hunt is prepared to make difficult decisions in support of a process that safeguards patients' interests."
Dave Prentis, leader of Unison, said downgrading the services will have long-term consequences for the capital.
The union accused the government of failing to listen to the concerns and arguments of clinicians, patients, hospital staff, unions and the local community.
"The campaign to protect Lewisham's A&E and maternity services has shown that people are willing to stand up and fight to keep their NHS safe and local. Hospital staff and local people will be shocked and outraged by today's decision, but the campaign to preserve these vital and highly valued services will go on."