Care homes which deliver low standards face the axe under Government plans to give the elderly more control over their lives.

The reforms come as Birmingham City Council presses ahead with plans to close 29 council-run care facilities, which are home to 1,000 elderly people.

It will instead open 10 new special care homes with day centre facilities attached - offering 640 beds between them.

Ministers last night said the proposals would improve care for the elderly by rewarding good providers and punishing those which failed to treat their customers with respect.

The Government will provide £520 million over three years for "personal care budgets" for the elderly and people with serious disabilities, to be spent as they wish.

The funding will go to local authorities, but in some cases it could then be transferred directly into the bank accounts of social service users or their relatives.

In other cases, it will be spent by local councils under their direction.

The measure was given a cautious welcome by Yardley MP John Hemming (Lib Dem) yesterday.

"The principle behind this is very welcome, but as always it will be essential to see how it operates in practice," he said.

Health Minister Ivan Lewis said the reforms recognised the fact that the people using services and their families knew better than anyone else what kind of care was required.

He said: "We want to see carers treated as experts. Often the husband, wife, son or daughter is far more expert in the needs than professionals.

"We want to transform the system so carers are treated as equal partners by professionals."

The proposals were widely welcomed last night. John Knight, head of policy and campaigns at Leonard Cheshire Disability, which

supports disabled people across the UK, said personal budgets had the potential to be a "fundamental revolution" in the way disabled people live their lives.

But he stressed that it was vital they were made available to all who could benefit.

"Disabled people must be given the right information to be able to make informed choices about the support they choose," he said.

"Unfortunately, in a climate of evertightening eligibility criteria for social care, this freedom and choice will only be available to a few.

"With the crisis in social care funding getting ever more acute, there is a worry that some of those who could benefit most from these important new developments could miss out, simply because the criteria for services has become so narrow.

"It is essential that the Government finds a way to make sure that all those who would benefit from personalised budgets can make the most of them."

Conservative shadow health secretary Andrew Lansley accused Labour of copying Conservative policies.

"We are glad that Labour are finally catching up with our logic. The Conservative party has been pushing for years for the expansion of individual budgets for social care.

"This would combine free health care with means-tested social care, with flexibility across the two."

Birmingham Council's cabinet gave final approval to the closure of 29 council-run old people's homes last month.

They will be replaced with 10 purpose-built special care centres and a range of extra-care housing, at a cost of more than £100 million. No care homes or attached day centres will close until new replacement services are available.