Elderly homeowners are to be encouraged to move into smaller properties under government-backed plans, enabling councils to rent out their homes to families.
The scheme - announced by Housing Minister Grant Shapps - is intended to ease pressure on young families at a time when many are struggling to find affordable accommodation.
Under the plans, local authorities would offer to help pensioners living in family homes to find more suitable places to live.
The councils would then take over responsibility for maintaining the property and renting it out at affordable rates, returning any profit to the elderly person or their estate.
Officials stressed the scheme was purely voluntary and no one would be forced to move.
Mr Shapps said that he wanted councils to follow the example of a government-backed pilot project run by Redbridge Council in east London.
"For too long the housing needs of the elderly have been neglected," he said.
"Older people who should be enjoying their homes have watched helplessly as their properties have become prisons, and many have been forced to sell their homes and move into residential care.
"With nearly a fifth of our population expected to be over 65 by 2020, radical and urgent change is needed to ensure the nation's housing needs are met."
Mr Shapps said for some older people, the move to more suitable accommodation could make a "life-changing difference".
"They can live independently for longer and enjoy more disposable income without selling their home, and other families can benefit from living in an affordable home," he said.