A £200 million boost for the building of more adapted homes for the elderly and disabled will form part of a major shake-up of the care sector, the Government said.
The five-year fund, which ministers believe will help provide an extra 6,000 properties, will form part of the Care and Support White Paper due to be published on Wednesday.
But the announcement came as the Government faced fire from campaigners over its failure to commit to funding a cap on care costs for individuals despite confirming its support in principle for the policy.
A progress report to be published next week alongside the White Paper will give support in principle to the recommendation of a review of services in England to limit the amount any individual must contribute. But it will say that a decision on whether the £1.7 billion a year policy can be afforded will have to await the next spending review in 2013/14.
The move sparked a political row, with Labour accusing ministers of abandoning cross-party talks and "kicking the issue into the long grass".
Officials said providing properties tailored for the disabled and infirm would not only help people stay in their own homes for longer but also relieve the pressure on carers. Ministers fear the market for such properties has been particularly squeezed by the recession.
Health Secretary Andrew Lansley said: "The vast majority of us want to stay in our own homes as we get old and we want to stay independent. We won't be able to cope with running up and down stairs and we might not be able to get in an out of the bath - so we're giving people the opportunity to downsize or choose different housing."
The Health Secretary was on Saturday forced to defend the Government's approach to long-term funding amid criticism from charities and the Opposition. A £35,000 cap was recommended last year by the review chaired by economist Andrew Dilnot - with pensioners expected to take out insurance to cover that sum and the state covering the balance.
Age UK welcomed the backing of the Dilnot blueprint but urged ministers to make more concrete commitments and Alzheimer's Society chief executive Jeremy Hughes said it was "an empty promise" and warned of "a catastrophic failure of political leadership as families continue to struggle to care for people with severe disabilities".
Shadow health secretary Andy Burnham said he was pleased with the "small measure of progress" of a commitment to a cap but said it was meaningless without agreement on how to fund it.