An A&E department and maternity services at a major hospital will be downgraded, Health Secretary Jeremy Hunt told MPs, just days after more than 25,000 people protested against the plans.
The changes at Lewisham Hospital in south-east London are part of a wider shake-up of services in the capital after the financial collapse of a neighbouring NHS trust.
Mr Hunt told MPs the changes would improve patient care in south London, saving up to 100 lives a year.
Lewisham Hospital has been hit by the knock-on effects of the financial difficulties of neighbouring South London Healthcare NHS Trust, which Mr Hunt said would now be dissolved.
Mr Hunt rejected proposals to close the A&E unit at Lewisham, but shadow health secretary Andy Burnham said the decision to downgrade its services set a "dangerous precedent" for other hospitals.
The changes are part of a radical overhaul proposed by a special administrator in response to nearby South London Healthcare NHS Trust (SLHT) going into administration after it started losing around £1.3 million a week
Mr Hunt rejected a plan to replace Lewisham's A&E unit with an "urgent care" centre.
However he accepted the recommendations of a further review by NHS medical director Sir Bruce Keogh that Lewisham should have a "smaller A&E service with 24/7 senior emergency medical cover".
The unit will continue to see up to three-quarters of those currently attending Lewisham A&E.
Mr Hunt also accepted that the maternity unit at Lewisham should be replaced by a midwife-led facility.
Mr Hunt told MPs: "The public campaign surrounding services at Lewisham Hospital has highlighted just how important it is to the local community.
"I respect and recognise the sense of unfairness people feel because their hospital has been caught up in the financial problems of its neighbour.
"However solving the financial crisis next door is also in the interest of the people of Lewisham because they too depend on the services which are currently part of South London Healthcare Trust."