Nicola Sturgeon told the SNP conference that the service provided at a regional treatment centre at Stracathro hospital in Angus would be delivered by the NHS from next year.

She told the conference: “Stracathro is coming home to the NHS.”

But the move was criticised by the Confederation of British Industry.

CBI Scotland assistant director David Lonsdale said: “This is the latest in a series of announcements designed to squeeze out the independent sector from providing public services, following earlier bans on firms from providing GP services, hospital catering and cleaning, and prisons.

“This ‘public sector good, private sector bad’ mentality is unfortunate and misguided.”

And he said: “Instead of banning commercial providers, ministers ought to be doing everything they can to encourage them, particularly in light of the need to deliver value for money services given the looming squeeze on the public finances.”

The regional treatment centre at the rural hospital was set up in 2006 as an NHS-private sector joint venture.

It provides non-emergency operations to patients from three health board areas - Tayside, Grampian, and Fife - at an annual cost of £5 million.

Ms Sturgeon told the SNP conference that this funding would continue, but the work would be delivered in and by the NHS from January.

“Currently the private sector provides the service at Stracathro but the NHS pays for it - which means, of course, that the NHS pays not just for the service provided but for the profit margin as well,” she said.

“This is the only private contract of its kind in Scotland and it comes to an end on January 3 next year.

“I will receive NHS Tayside’s final business case for the future of the service next month.

“However, I can announce today that this government will invest £5 million a year to secure the future of the Stracathro Regional Treatment Centre.

“But we’ll do so with one very important difference - from January, it will be delivered in and by the National Health Service.”

Ms Sturgeon also warned the conference that the threat posed by swine flu “is not yet behind us”.

She added: “It almost certainly has even bigger challenges in store.”

Ms Sturgeon pointed out there had been a 50% increase in deaths of people who had the disease in the last week, at 15 people.

And she urged those most at risk from the virus to get vaccinated.

The programme to vaccinate the 1.3 million people in the priority groups begins on Wednesday.

“Prevention is better than cure,” Ms Sturgeon said. “And that is why our best defence will be vaccination.”

She went on: “I know some people worry about vaccines. I know that there are those who think that vaccination is not necessary.

“But make no mistake, swine flu can kill and this vaccine will save lives.

“So today I encourage everyone in Scotland who over the next few weeks is offered this vaccine to take up the opportunity.

“If you are pregnant, if you have asthma, if you have heart problems, if you live with someone who is being treated for cancer, if you do a job that is vital to the NHS, if you are in any of the priority groups, I urge you to get vaccinated.

“You will be protecting yourself. You will be protecting those close to you. And you will be helping the NHS protect all of us.”

The Deputy First Minister also used her speech to hit out at her political opponents, branding Labour and the Conservatives as “the Tweedledum and Tweedledee of the politics of failure”.

She claimed those two parties were “vying with each other over how much they will cut public services”.

She told the conference: “It’s not just the Tories who pose a threat to Scotland. Labour does too.

“Just like the Tories, Labour will cut spending on vital Scottish services. And just like the Tories, Labour wants to spend billions putting new Trident nuclear weapons on the Clyde.”

And she argued the SNP’s opposition to nuclear weapons was “just one more reason” why First Minister Alex Salmond should be included in any televised leadership debates in the run up to the general election.