Local councils face penalty charges if they fail to provide sufficient care home beds for the elderly, the health secretary has warned.

Setting out to MPs how new Budget cash will be spent in the social services sector, Alan Milburn announced new legislation making local councils responsible for the cost of beds needlessly blocked in hospitals by the absence of care provision.

The move was condemned by the Conservatives as an attempt to blame local councils for the government's healthcare failures.

Shadow health secretary Liam Fox said local council tax payers would be forced to pick up the bill "for the government's incompetence in their care home policy".

But Milburn said action had to be taken to tackle the problem of bed blocking, which was denying pensioners "dignity and security in old age".

With local councils getting budget increases of six per cent over the rate of inflation, the health secretary said it was right to give councils responsibility for the costs of bed blocking.

"Councils will need to use these resources to ensure that older people are able to leave hospital when their treatment is completed. If councils reduce the current level of bed blocking, so that older people are able to leave hospital safely when they are well, they will have the freedom to use these extra resources to invest in extra services," he said.

"If bed blocking goes up, councils will incur the costs of keeping older people in hospital unnecessarily. There will be similar incentives to prevent hospitals seeking to discharge patients prematurely.

"In this way we will provide local councils with the investment and with the incentives to improve care for older people."

The health secretary also pledged action on making more beds available, with councils able to increase fees to first stabilise the care home market and then secure more care home beds.

But the plans came under heavy fire from the Conservatives. Liam Fox said the government had been warned for more than three years about the lack of beds in care homes.

"What the government are doing is now shifting the blame, as they always do, so that the blame for bed blocking is now to lie with local government and not with the people who genuinely created the problem, with central government," he said.

"What they are now going to do is to put the financial burden and the penalties on to local government. In other words local council tax payers will be fined for the government's incompetence in their care home policy, and that is a terrible indictment of this government."

The Liberal Democrat spokesman on older people, Paul Burstow, also warned against the new policy.

"There is a real danger that elderly people will be bundled out of hospital into care homes miles away from their families and friends as cash strapped social services departments try to avoid paying penalties," he said.

"The proposals put forward by Alan Milburn amount to a bureaucratic and administrative nightmare, as more staff are taken on to deal with the ever increasing amounts of paperwork."