The NHS competition watchdog has warned that the proposed merger of three east London hospitals, including Whitechapel’s Royal London, will leave patients with less choice of care services.

An investigation by The Co-operation and Competition Panel (CCP) concluded that any benefits from a merger of Barts and the London NHS Trust with Newham University Hospital and Whipps Cross University NHS trusts would not outweigh the drawbacks for patients.

CCP director Catherine Davies said: “We know there are some difficult challenges facing health care services in northeast London but these proposals don’t necessarily provide the best solution.

“As well as the reduction in current choice, having one very large provider in northeast London also risks stifling the development of alternative services and providers in the future.”

The CCP wants Newham University Hospital to be excluded from the merger.

Ms Davies said: “Patients currently using Newham for routine elective services tend to view Barts and The London and Whipps Cross Hospitals as their preferred alternatives but under this merger they would in effect become one provider, removing that choice - and the incentive of the hospital to improve and innovate to attract those patients.”

Mile End Hospital is also among those set to join what could become the country’s largest NHS trust, with a turnover of �1.1billion, if the merger receives the government’s go-ahead in April.

The plans have already been approved by the strategic health authority NHS London.

Barts and The London NHS Trust said in a statement that it would be a “huge setback” if Newham University Hospital was excluded from the merger.

Peter Morris, chief executive of Barts and the London, who is also the lead chief executive for the merger, said it would “secure the long-term viability of services at both Newham and Whipps Cross, and will more rapidly realise substantial back-office savings, improve services and give us new opportunities to improve health and reduce health inequalities”.

The CCP said is now is seeking views on the merger by January 6 before recommending modifications to Health Secretary Andrew Lansley.