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NHS hospitals will be looking to exploit a host of "exciting" opportunities to move into private health markets, bosses say.

Self-governing hospitals - known as foundation trusts - have had their private income capped to date, but this is to be lifted in the NHS overhaul.

The Foundation Trust Network believes the move will spark a burst of innovation in the sector.

But campaigners said they were worried NHS services would be harmed.

To get foundation trust legislation through parliament in 2003, ministers agreed to a cap on private work to ensure the hospitals remained true to their NHS traditions.

This has stopped some of the leading hospitals in the NHS competing with private firms for patients.

But that will now change under the proposals unveiled in Monday's white paper. Health Secretary Andrew Lansley said he wanted to create a "vibrant" industry of social enterprises by scrapping the rule and ordering all NHS trusts to become foundation trusts within three years.

Sue Slipman, director of the Foundation Trust Network, said the move would make a big difference.

"It is exciting for foundation trusts. We will have to wait to see what exactly happens, but there are huge opportunities to innovate."

She said one of the most obvious areas for expansion would be in fertility services where treatment on the NHS is severely restricted.

"In the past these patients have had their NHS cycles and then left for private treatment. That is money that has been lost to the system."

She also said mental health trusts may be interested in offering talking therapies to businesses for their workforce health schemes.

Joint ventures with the private sector may also prove popular, she added, covering both services and the development of drugs.

Overstretch concerns

University College Hospital in London has already gone down this route with a private US health firm which has located a private unit on its site for cancer treatment.

The firm leases the space as well as paying for the NHS services it uses, such as intensive care, radiology and cleaning and catering.

The trust has also established a joint venture with a private firm to provide pathology services.

Sir Robert Naylor, the chief executive of the trust, said: "These initiatives bring in money which can then be reinvested in NHS services."

Many NHS hospitals also operate their own private wings, although most of these only bring in a small amount of income. The exceptions are specialist centres such as the Royal Marsden cancer hospitals and Moorfield Eye Hospital.

But John Lister, of the union-funded pressure group Health Emergency, said he had concerns.

"Hospitals could overstretch themselves in chasing private patients which in turn takes away from the NHS side of it.

"It also creates perverse incentives whereby they stand to make more money by getting patients into their private wings.

"They say money is reinvested in services, but I am not sure this is always the case. Some of these hospitals have huge surpluses, the money is moved around and does not end back where it should. If we get more and more of this, it will be a step towards the privatisation of the health service."

A spokeswoman for the Department of Health said trusts were not being privatised.

"This isn't about turning foundation trusts into profit-driven bodies. The legislation will make clear that they are social enterprises and give them more control over their own futures."