Care services minister Norman Lamb has announced at the Lib Dem conference that the government fund for specialised housing is to be increased from £200m to £300m.
The extra funding means 9,000 new specialist homes for the elderly can be built over the next five years.
Mr Lamb said: “Staying independent and having the choice to live in your own home as you get older is something we know most people want.”
Chartered Institute of Housing director of health and wellbeing Domini Gunn welcomed the move.
He said: “We are delighted to see the Department of Health making a commitment to help support greater health and independence for older people and to provide safe homes.
“The investment will create new opportunities to deliver additional and improved services through collaboration with housing and health professionals as well as planning departments.
“This is a great opportunity for housing to be recognised as an important function in the effective delivery of care provision.”
The CIH is currently lobbying the Department of Health to consider home modifications to enable older people to stay in their homes.