"A Bill will also be introduced to help ensure that local authorities provide community care services to older people awaiting discharge from hospital."

Ministers believe the problem of bed blocking is a major obstacle to delivering improvement in waiting times in many hospitals.

Controversial proposals could see local councils "fined" if they fail to provide sufficient long term care places for elderly patients, preventing them from being moved out from hospital wards after their treatment.

Government plans, modelled on the systems in Sweden and other European countries, will compel local authorities to invest their growing budgets in extra services.

If bed blocking goes up, councils will incur the cost of keeping older people in hospital unnecessarily.

To balance the plan, there will be similar incentives to prevent hospitals from seeking to discharge patients prematurely.

The government says it is committed to ensuring that older people would be provided with "seamless care, free from institutional barriers".

Critics say the plans could leave local councils and hospitals in a series of disputes over who is responsible when things go wrong.

But ministers insist the new laws will encourage a partnership approach ensuring all individuals receive "the care they need, when and where they need it".

The plan also forms a key part of the government's drive to slash waiting lists.

By tackling the problems of "bed blocking", ministers aim to provide more capacity for other patients.

The government also argues that there is also a social benefit, promoting the independence of older people by allowing them to leave hospital for "a more homely environment" as quickly as possible.

The bill's announcement was not received with universal applause: local authorities were predictably against the measures.

The Local Government Association's social services chair, Alison King, said:

"Putting into place a bureaucratic and costly system that would encourage one public service to claim back money from a partner public service is a recipe for blame and recrimination, not cooperation, and could set back much of the excellent work that is being done across the country to provide joined-up services for older people."

Key points:

• Create a financial incentive for local authorities to assess individuals who are in hospital and make provision for any community care services they may need, as quickly as possible;

• Ensure that local authorities, acute trusts and primary care trusts work in partnership to provide "seamless" care. It would require local authorities and the NHS to work together to determine the services needed by an individual;

• Simplify the existing system and make it more user friendly by removing the power of local authorities to charge for certain community equipment services and intermediate care;

• Create an incentive for local authorities to move patients from acute beds to more appropriate care;

• Promote the independence of older people by facilitating their move from an acute hospital bed to a more homely environment as quickly as possible.

House of Commons

First reading: November 14 2002 (HC Bill 4)

Second reading: November 28 2002

Committee stage (SC D)

• 1st sitting: December 10 2002 (am)
• 2nd sitting: December 10 2002 (pm)
• 3rd sitting: December 12 2002 (am)
• 4th sitting: December 12 2002 (pm)

The bill as amended in committee: (HC Bill 35)

Remaining stages: January 15 2003

House of Lords

First reading: January 16 2003 (HL Bill 20)

Second reading: January 27 2003

Committee stage

• 1st day: February 17 2003
• 2nd day: February 18 2003
• Bill as amended (HL Bill 35)

Report stage: March 10 2003

Third reading: March 17 2003

House of Commons

Consideration of Lords amendments: March 19 2003

House of Lords

Consideration of Commons Amendments March 27 2003

House of Commons

Consideration of Lords Amendments April 1 2003

Royal Assent: April 8 2003