Ministers are to effectively abandon their pledge to ring-fence NHS spending by diverting more than £1bn to cover the spiralling cost of social care, The Independent can disclose.
The Government has decided to act amid fears that hospitals are admitting elderly patients who could be better cared for at home.
The plans – being drawn up as part of the Government's spending review – are likely to see at least £1bn transferred from the Department of Health to local authorities to keep people out of hospital.
New figures show that accident and emergency units – where many elderly patients are first admitted – have failed to hit the target for treating 95 per cent of patients within four hours for 30 weeks straight.
The plans, which come as many trusts struggle under severe financial pressures, appear to go against the Government's pledge to ring-fence NHS spending and protect it from the £11.5bn of cuts that the Treasury has ordered for 2015-16. However ministers will argue that pouring NHS funds into social care will treat the elderly and those with chronic conditions in the community, reducing the pressure on overstretched hospitals – which will in turn save the health service money.
Councils have had to restrict funding for social care as a result of their own budget cuts, leaving people with chronic health conditions to seek help in hospitals instead.
The Independent understands that the Treasury Chief Secretary, Danny Alexander, and the Cabinet Secretary, Sir Jeremy Heywood, are looking at ways to use the health budget to help councils.
A Whitehall source said: "The NHS budget is going to have to help fund social care.
"It should be a win-win because if you look after people outside hospital you relieve the pressure on health service budgets. That's how you justify it."
A minister added: "You can ring-fence health spending without protecting every penny of the Department of Health budget."
Unprotected departments have been ordered to find cuts of about 10 per cent in their budgets for 2015-16. Ministers will submit their opening offers to the Treasury on Monday. The final deal will be announced to Parliament on 26 June. Under plans being discussed in Whitehall, the money is expected to be earmarked for schemes to help elderly people to stay in their own homes and support them when they come out of hospital.
That could see millions sent to local authorities to fund home helps to cook, clean and check on the health of the elderly and sick. The money could also be spent on meals on wheels schemes, transport for outpatients to see their GP or to fund stairlifts for the elderly so that they can stay in their own homes. One senior government source said: "In theory this should save money because it's far cheaper to look after people in the community than it is if they are regularly being admitted to hospital.
"Councils simply don't have the money to do this any more and it is being made clear that the NHS is going to shoulder more of the financial burden." David Cameron revealed earlier this year that the Department for International Development, whose own budget is protected, would be asked to pay for some non-lethal projects currently paid for by the Ministry of Defence.
But removing funds from the NHS will prove controversial, since the Prime Minister was boasting earlier this week that the Coalition is spending more money on the health service.
With the NHS already having to make savings of £20bn for the four-year period of the current spending review critics will argue that other services could suffer.
But another Whitehall source said that the plans would be cost-effective for the Department of Health: "At the moment there are 20 million people with chronic conditions. They get by until they suffer an acute situation and block up hospital accident and emergency departments."
The shadow Health Secretary, Andy Burnham, said: "It's yet more proof that the NHS is not safe in David Cameron's hands."