Plans to dissolve a debt-ridden health trust which was on the brink of bankruptcy could have a “devastating” effect on a financially stable trust nearby, doctors have said.

South London Healthcare Trust, which runs three hospitals in the capital, was the first to be placed in administration after it started losing around £1.3m a week.

Special administrator Matthew Kershaw recommended the trust should now be broken up, with other organisations taking over the management and delivery of its services.

The proposals would result in a radical overhaul of services in south London - including significant changes to nearby Lewisham Healthcare Trust.

Mr Kershaw earmarked University Hospital Lewisham’s A&E department for closure and suggested its maternity ward should be turned into a midwife-led unit.

Under his plans the emergency department, which recently completed a £12m revamp, would be downgraded to an “urgent care” unit.

But campaigners said if Lewisham’s A&E department was downgraded it would lead to the closure of other departments at the hospital.

Tony O’Sullivan, consultant paediatrician at Lewisham, said the move would have a “devastating” effect on the trust.

He said: “They are talking about shutting down all the emergency services, which really does rip out the heart of the hospital, and people will look elsewhere for their medical care.”

John O’Donohue, consultant physician at Lewisham, branded the proposals a “travesty” and said the special administrator had “ignored the views of experts and the public”.

He said: “If services at a successful and well-run hospital like Lewisham are closed due to problems at a neighbouring trust, then no hospital in London, or the country, is safe.

“These plans are a travesty. They are unsafe, rushed and unjust, but most of all will disadvantage the people of Lewisham.”

More than 40,000 people signed a petition and 15,000 local people took part in a demonstration in November to protect their local services, he added.

Mr Kershaw also proposed that South London’s Queen Elizabeth Hospital site in Woolwich should merge with Lewisham to create a new organisation providing care for the communities of Greenwich and Lewisham.

An Lewisham spokesman expressed support for the merger but said the trust did not agree with the “prescriptive approach to service change”.

He said: “As a successful organisation, we have said we would like to determine the future of services ourselves, and we would include proper engagement with stakeholders and the public.”

In his proposals, Mr Kershaw recommended that any debts held by South London should be written off by the Department of Health so new organisations are not “saddled with the issues of the past”.

This would include bailing out massive private finance initiative debts, which use up 16 per cent of trust income.

Plans also include the Princess Royal University Hospital in Farnborough, near Bromley, being acquired by King’s College Hospital Foundation Trust.

Reorganisation could save around £42m from the staff pay budget and previous estimates suggested those savings would include cutting 140 medical staff across the trust’s three hospitals.

Mr Kershaw said South London remained the “biggest financial problem” across the NHS.

The final report has been presented to health secretary Jeremy Hunt who has 20 working days to review its recommendations and make a decision on the future of the NHS in south east London by 1 February.