The Government has found an extra £150m for patients to receive care at home rather than in hospital.
The Health Secretary, Andrew Lansley, said the money had become available thanks to efficiency savings in his department's central budget.
Another £20m is also being made available for the disabled facilities grant, which helps people to live independently at home.
The move follows a warning from the charity Age UK that cuts to local authority funding are creating an "absolute crisis" in social care for the elderly.
The influential King's Fund think-tank has also cautioned that old people are often taking up valuable hospital bed space unnecessarily.
Primary care trusts and local authorities will be able to decide how best to spend the cash to relieve pressure on hospitals over the busy winter period.
Mr Lansley said: "Savings have been made in the Department of Health's budget which we are investing to help people leave hospital as quickly as they can, when they are ready, and to receive support at home."Reuse content