The health secretary has been accused of endangering the future of smaller hospitals by downgrading a hospital's A&E and maternity units because of deep financial problems at a nearby NHS trust.

Labour said Jeremy Hunt had set a dangerous precedent by agreeing that Lewisham hospital should slim down these two key services as part of a restructuring of NHS care in south-east London sparked by debts run up by South London Healthcare NHS Trust (SLHT).

Andy Burnham, the shadow health secretary, said: "He [Hunt] has accepted the principle that a successful local hospital can have its services downgraded to pay for the failures of another trust.

"That takes the NHS into new and uncharted territory."

Hunt acknowledged the "sense of unfairness that people feel because their hospital has been caught up in the financial problems of its neighbour".

About 25,000 people attended a protest march last weekend against the running down of Lewisham hospital, which was first proposed by the government-appointed troubleshooter Matthew Kershaw as a key element of his plan to guarantee that NHS care in the area remains viable financially and clinically.

Kershaw had argued that Lewisham's A&E department should be replaced by an urgent-care centre for the less seriously ill, with acute emergency cases instead being treated in other south-east London hospitals.

Hunt rejected that and instead said that, on the advice of the NHS's medical director, Sir Bruce Keogh, "Lewisham hospital should retain a smaller A&E service with 24/7 senior emergency medical cover".

He said it would treat "up to three-quarters" of the patients who currently use it, especially frail elderly patients who arrive by ambulance but not as blue-light emergencies, and those needing short, relatively straightforward treatments. But patients with the most serious illnesses or injuries would in future go to other hospitals.

This concession did not appease doctors and campaigners in Lewisham, who accused Hunt of "spin" and deception and in effect implementing Kershaw's unpopular plan under the guise of saving the A&E.

"The secretary of state is trying to redefine what an A&E is. This is an urgent-care centre by another name," said Dr John O'Donoghue, a consultant physician at Lewisham.

"The proposals are unsafe and will lead to essential services being withdrawn from Lewisham. The irony is that we are providing these services to a high standard and are an example of a small trust providing excellent care."

The slimmed-down emergency unit could end up being closed on safety grounds because it may have trouble recruiting enough properly qualified staff and would not have its own intensive-care unit, he added.

Urgent-care centres, which are meant to take the pressure off A&Es, are usually staffed by GPs and nurses. But a traditional A&E is staffed by what Hunt said Lewisham will retain: experienced hospital doctors.

Dr Louise Irvine, a local GP and chair of the Save Lewisham Hospital campaign, said: "Talking about Lewisham retaining emergency services is government 'spin', designed to confuse patients.

"In fact Hunt is proposing a glorified 24/7 GP practice.

"To claim that most people could be treated in this setting – with services staffed by GPs and nurses – is simply not true. It glosses over the destruction of other services and ignores concerns over safety which local GPs have raised."

Lewisham campaigners are angry that a hospital that provides good A&E care and has stable finances is being forced to pay a high price for SLHT's failings.

Hunt also gave what may be seen as a hint that he is increasingly ready to endorse some of the growing number of proposals to reorganise hospital services that have emerged across England, often involving one or more hospitals losing its A&E, maternity unit or other function.

He endorsed Kershaw's decision to include Lewisham in his consideration of how to tackle SLHT's problems and he insisted that reorganising A&E care would mean that patients' average journey time to one in future would only take one minute longer. Overall, the shakeup of hospital care in south-east London could save 100 lives a year, he added.

Burnham said: "In his [Hunt's] new market-driven NHS, finance takes precedence and any hospital is vulnerable to changes, no matter how successful, through back-door reconfiguration."

Lewisham council warned Hunt that it may take legal action to derail his decision. Kershaw's remit to sort out SLHT may not have allowed him to propose changes to an unconnected hospital, they say.

SLHT is the first hospital to join the NHS's "unsustainable provider" programme for failing hospitals.