Consultants McKinsey and Company conducted a study recommending the organisation should cut 137,000 clinical and admin posts to save £20 billion, according to a report in The Health Service Journal.
But the Department of Health claims it needs more staff, not fewer.
Mike O'Brien, minister of state for health services, said: "Ministers have rejected the suggested proposals in the McKinsey report and there are no plans to adopt them in the future. The Government does not believe the right answer to improving the NHS now or in the future is to cut the NHS workforce. In core frontline services like maternity, nursing and primary care we need more staff rather than fewer."
"It is absolutely right that every Government department looks for efficiency savings and examines all avenues for doing so. In the NHS our reforms are already delivering billions of pounds of efficiencies and making further savings would mean we could reinvest across the NHS where it is most needed.
"That the Tories are reduced to claiming reports about efficiencies are a bad thing or to conflate them with spending cuts, which we have not and will not make, would be laughable if it wasn't so riddled with hypocrisy."
But shadow health secretary Andrew Lansley said: "Yet again Labour ministers are failing to be straight with the British people. Andy Burnham [the health secretary] promised to protect the NHS, but now we find out that his department has been drawing up secret plans for swingeing cuts.
"After years of declining productivity, this report shows that Labour still doesn't get it. Instead of relying on top-down cuts plans drawn up by management consultants, they should be looking to create incentives through the way hospitals are paid which would drive up standards and drive down costs."
