The move is an admission that the much-criticised policy of "care in the community" has been a failure, following a string of murders by schizophrenics and others who in the past would have been patients in the old long-stay lunatic asylums.
The homes - for a new generation of long-stay patients who will need care for years rather than weeks or months - would be targetted specifically at the group of patients which would include Christopher Clunis, the paranoid schizophrenic who in 1992 stabbed to death Jonathan Zito on a north London underground station.
"If these homes are provided, they should reduce the number of these ghastly tragedies," Dr Rachel Jenkins, principal medical officer at the Department of Health said yesterday.
"If Christopher Clunis had had this, we would not have lost his liberty for life. It would have helped him and helped the public."
The announcement came as ministers effectively admitted that care in the community is failing, in some places for lack of funds. Nearly one- third of English health authorities are still unlikely to have plans for a comprehensive service in place by April next year, a survey commissioned by the department showed.
But as the Labour party, health authorities and mental health charities welcomed the change in policy, Stephen Dorrell, the Secretary of State for Health, was accused of providing too few resources to ensure that the homes become a reality.
Figures released by the NHS Executive show that up to pounds 400m in capital and pounds 250m a year in running costs would be needed to provide the homes. Next year's allocation of extra spending on mental health services, detailed by Mr Dorrell yesterday, is pounds 95m.
Much of that, however, is earmarked for local authorities, the mentally ill homeless and other projects, or comes from health authorities' existing budgets.
Mr Dorrell insisted that the new policy did not amount to a reversal of care in the community - the NHS Executive estimates only some 5,000 to 10,000 patients would benefit from such care - and the Secretary of State said "care in the community has too often been taken to mean the abandonment of residential care for mentally ill people. This not, and never has been, our policy".
But there was, he said, accumulating evidence of the need for residential nursing care "for a relatively small group of so-called 'new' long-stay clients". Ministers would be looking to health authorities to provide for such homes in their future plans.
Marjorie Wallace, chief executive of Sane, said the concept was right, but asked where the funds to provide them were coming from. "Only a tiny number will benefit from this, when there are huge numbers simply being turned away from hospitals."
Harriet Harman, Labour's health spokeswoman, renewed her call for a moratorium on bed closures.
She said of the new staffed homes "we will believe it when we see it. The Government has a record on mental health of big announcements with no follow through.
"When these homes will cost hundreds of millions to build and run, today's pounds 95m is not even a start."
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