Pensioners moving into residential care will be given state loans so they do not have to sell their property immediately, under plans being unveiled on Wednesday.
People will be able to borrow money from councils at nominal interest rates, with the sum being paid back after their death.
The scheme, being introduced across England in April 2015, is intended to help around 40,000 people each year who are forced to sell their homes to cover care costs.
Some local authorities already operate similar arrangements, but provision varies widely across the country.
The announcement is part of a raft of proposals being published by Health Secretary Andrew Lansley.
It emerged over the weekend that cross-party talks on reform of social care for the elderly had broken down after ministers made clear funding decisions would not be taken until next year's spending review.
Labour has insisted the coalition's pledges are "meaningless" without concrete plans for meeting the estimated £1.7bn cost.
But Lansley is to press ahead with the release of a white paper and draft bill on social care, as well as a report detailing progress towards solutions on key issues.
Ministers want to cap the amount anyone pays towards care during their lifetime at £35,000.
Lansley said: "It is hard enough for people to come to terms with needing to pay for extra help when their circumstances change - whether their health has suddenly deteriorated or age has started to take its toll.
"The last thing people want to think is having to immediately sell their home to pay for residential care.
"That is why, from April 2015, we will ensure that people will be able to delay selling their home to pay for residential care. This will give people greater flexibility and peace of mind at what can be a very traumatic time."
In an article for the Daily Telegraph, he added: "I recognise that we can go further. We can enable people not to lose everything they have worked and saved for if they need care for several years.
"That is why we agree in principle that a limit on the amount that people pay themselves for the long-term care they receive would be the right way forward."
The "universal deferred payment" scheme for care homes was first proposed by a Royal Commission more than a decade ago.
Since then, councils have been able to offer interest-free loans to people who face having to sell their home to pay for care.
But the new scheme will order councils to provide the loans.
Details will be negotiated between the Government and local authorities in the coming months, with the level of interest payments likely to be crucial.
The social care proposals are also expected to include initiatives to help carers and give people far more control over their own care.
The Government is keen for more pensioners to be looked after in their own homes, rather than go into nursing homes.
An additional £300m is being transferred from the NHS to social care over the next two year, in a bid to "improve integration" between the services.
Ahead of Lansley's statement, Labour called on the Government to use NHS under-spends to help tackle the "growing social care crisis".
Shadow health secretary Andy Burnham said: "Today's proposals are meaningless without the money to make them a reality.
"George Osborne should get his act together and hand back half the money he has taken from the Health budget.
"The Government is failing to face up to England's care crisis. Older and vulnerable people are seeing support withdrawn and increased charges for care.
"Councils are in danger of being overwhelmed and the NHS simply won't be able to function if things are left as they are."
Lansley denied the scheme would encourage people not to save for their retirement over fears the money would go to the state.
He told Sky News: "If we are able to fund a system of capping the care costs that people have to pay it will mean exactly that problem is substantially solved, that people will know that they can protect what they've worked and saved for through their lives even if they were to have the consequences for example of having dementia over several years later in life."