The Health and Social Care (Community Health and Standards) Bill to set up foundation hospitals was given a second reading by 304 votes to 230. A rebel amendment designed to block the bill was defeated by 297 votes to 117, a majority of 180.

Sixty-five Labour MPs rebelled, a smaller number than many had expected but still the third largest revolt of Tony Blair's premiership - after the votes on Iraq and welfare reform. Former health secretary Frank Dobson and the chairman of the health select committee David Hinchliffe were among the rebels.

The bill is currently in the House of Commons Standing Committee having received its Second Reading on May 7. The rebels say they will continue their fight during the committee stage.

In a related development virtually all the NHS hospitals which expressed an interest in becoming foundation trusts are to go ahead with their applications. In total, 29 out of 32 hospitals named by the government in March have been shortlisted. They will now mount a bid to become foundation hospitals in April next year.