The Government is facing threats of industrial action after signalling it wants to call a halt to NHS pay rises.
Instead of using funding set aside for a 1% pay rise for staff, the Department of Health (DoH) is proposing it is spent on the modernisation of pay structures.
In its submission to the NHS pay review body, the department said the NHS was facing the biggest financial challenge in its history.
"Despite real terms growth in its budget in successive years, it needs to continue to secure improved value from the taxpayers' investment, if it is to meet the growing pressures it faces in the years to come both from an ageing and growing population and the need to improve the quality of care provided," it said.
Unions reacted with anger, saying that even raising the prospect of a pay freeze would demoralise staff.
Rehana Azam, national officer of the GMB, said: "GMB members in the NHS are already totally fed up with this Government's cuts to NHS services and jobs, which staff know is putting patient wellbeing at risk.
"If the Government now wants to attack NHS staff pay while offering tax cuts to married couples it will be the final straw that will lead to calls for industrial action."
Peter Carter, general secretary of the Royal College of Nursing, said:"It is demoralising for nursing staff to discover that while senior managers have enjoyed a pay increase of 13% since 2009, the Government are asking frontline staff to take another pay freeze to save the NHS money.
"It is completely unfair to say a pay increase of just 1%, following years of real-terms pay cuts, will prevent employers from recruiting more nurses and put patient safety at risk.
"It is simply wrong to imply that regular pay rises are awarded to NHS staff simply for time served, when this is not the case. Increments are only paid when a nurse can demonstrate their experience and skills have improved. It is the responsibility of employers to ensure this appraisal system is working properly."
Phil Gray, chief executive of the Chartered Society of Physiotherapy, said: "This is a very disappointing move that shows contempt for the principle of working together in partnership to produce a fair deal for NHS staff.
"Those hard-working and dedicated professionals have suffered a real-terms pay cut of up to 12% in recent years and only stood to gain 1% from April.
"The Government should step back from this ill-judged position and allow next year's pay rise to go ahead."
The health department said the dilemma is "either pay staff more, accepting that this may do little to improve the quality of care for patients and is likely to restrict the number of staff employers can afford to employ, or, to reform contracts to enable employers to use their pay bill, as part of their overall employment offer, to maintain safe staffing levels, with stronger links to performance, quality and productivity".
It claimed the 1% pay rise was not affordable alongside the current NHS system which sees incremental salary rises linked to length of service and performance.
In his spending review in June, Chancellor George Osborne said public sector pay rises in 2015/16 "will be limited to an average of up to 1%".
But he also said the Government would reform "antiquated" systems of automatic pay progression that were seeing some salaries rise by 7% "regardless of performance".
"Progression pay can at best be described as antiquated; at worst, it's deeply unfair to other parts of the public sector who don't get it and to the private sector who have to pay for it," he told the Commons.
"So we will end automatic progression pay in the civil service by 2015-16. And we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police."
The DoH quoted the Chancellor's words in its submission to the pay review bodies, and said the national medical pay frameworks meant rises worth around £200 million a year.
"This is out of step with our wider policy on public sector pay and the ambitions the Chancellor set out in the spending round." it said.
"The 1% that the Government has made available for pay in the spending round would, in our view, be best deployed in supporting the modernisation of national pay frameworks.
"In particular, that the reform of medical contracts should seek to improve the quality of patient care and therefore outcomes by ensuring there is a better balance between pay, performance, and productivity rather than time served.
"Substantial reforms to progression pay will be taken forward or are already under way across the public sector. The priority for this pay round therefore, should be support for continued reform of national contracts so that they deliver improvements in performance and productivity, are affordable and fit for purpose.
"Putting patients at the heart of everything the NHS does means ensuring services are available seven days a week and that staff are rewarded for what they do for patients, not time served."