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The NHS is facing its "greatest ever challenge" in maintaining quality services during the funding squeeze, managers say.

Nigel Edwards, acting head of the NHS Confederation, warned there was "no silver bullet".

He said moving care away from hospitals and improving the management of long-term conditions such as diabetes would be essential.

But he also acknowledged cuts would be made - and managers hit as a result.

The health service in England has been told to find up to £20bn of savings by 2014 - the equivalent of 5% of its annual budget.

This comes at a time when demands are increasing as a result of rising drug costs, an ageing population and health problems caused by obesity.

Speaking ahead of the NHS Confederation's annual conference which starts in Liverpool on Wednesday, Mr Edwards said: "The NHS is facing the greatest ever challenge to the way it works and the way it cares for patients.

"Now is the time for everyone working in our health service to rise to the challenge of providing improvements in care while also working more efficiently."

The NHS has already started setting aside money to pay for redundancies and Mr Edwards accepted managers would be first in line.

The coalition government has said it wants to reduce management costs by 46% in the coming years.

Mr Edwards said it was right these savings were made, but added everyone would have to take their "fair share".

Management in the NHS is also likely to come under threat from the desire of the new government to put GPs in charge of local budgets.

Health Secretary Andrew Lansley has said he sees them as taking responsibility for budgets - a role traditionally performed by managers working for primary care trusts.