Health secretary Alan Milburn's promise of more NHS beds and a fresh focus on care for elderly people appears to have won the backing of key health service interest groups, boosting his attempts to sustain the momentum of his embattled reforms.

In a passionate restatement of the case for NHS modernisation, Mr Milburn used his speech at the King's Fund last week to draw a line under weeks of turmoil caused by the flu outbreak, funding controversies and polls pointing to wavering public trust in Labour's stewardship of the health service.

He acknowledged that the NHS had not had the capacity to cope with the recent winter pressures and revealed - in a preview of the national beds inquiry report, due for high-profile launch today - that there would be an expansion of bed numbers 'in the whole system'.

Many of the new beds would be expected to emerge in an 'intermediate' level of care proposed by Mr Milburn, comprising so-called 'granny wards' in hospitals and 'step-down' community facilities.

But it was unclear whether NHS acute bed numbers - regarded by the public, if not policy makers, as a proxy for the health of the NHS - would continue to fall overall, as they have done for the past decade.

Nigel Edwards, policy director at the NHS Confederation, said his reading was that acute bed numbers could still decline. 'There may be fewer acute beds; the question is now how much capacity and flexibility there is in the whole system.'

Conservative health spokesman Dr Liam Fox said he welcomed 'any increase in capacity in healthcare'. But he warned that extra beds for elderly people must improve quality of care rather than be a convenience for hospital bed managers.

Mr Milburn said the beds inquiry would show the NHS was a 'relatively efficient' user of beds, compared with other European countries.

There is a wide variation in hospital bed use across the NHS. But the inquiry had not shown up any 'simple link' between acute bed numbers and hospitals' ability to manage emergencies and elective waiting times. 'All this points to the fact that we need to take a wholesystems view of services. And a whole-systems review will, under any scenario, require an increase in the number of beds in the whole system, ' said Mr Milburn.

'In my view, the trend of the last decade or more of reductions in hospital beds cannot keep pace with the changing demography, additional activity and the new service we envisage for the NHS.'

He said intermediate care would free elderly patients 'trapped' in acute beds. New facilities would have to be built, for which there was 'a new role for private finance'. But there was no mention of Lottery money - flagged up in media briefings earlier in the week as a potential source of funds.

'A new approach': reactions to Milburn's speech

The NHS Confederation said Mr Milburn had recognised that the NHS had a 'serious capacity problem'. But it warned against seeing his words as a 'return to 'out of sight, out of mind' convalescence or out-dated cottage hospitals'.

The Royal College of Nursing welcomed 'a new approach' which could build on resources, such as 'excellent community hospitals faced with closure for financial reasons'.

Age Concern was pleased that more resources would be put into services for elderly people, but warned that these should be 'permanent' as opposed to being funded by the Lottery.

Zeal and steel on show

The great and the good of the NHS - senior managers, clinicians, academics and trade unionists - had got up early and turned out en masse with the press for Mr Milburn's hastily convened King's Fund speech.

If they had come to see Mr Milburn waver in his resolve or wince from the bruises of his experiences over the winter, they were disappointed.

He had cherry-picked his own unpublished beds report for tasty morsels to help distract from recent crises But that message was honed with Milburnesque steel. He made it clear, with a hint of messianic zeal, that his commitment to the NHS and its modernisation would not falter.

One manager said: 'People were really impressed. He really believes it all. Either that or he's a very good actor.'