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Social services departments will pay a charge of up to £120 a day if they are responsible for delaying an older person's discharge from hospital, under a government proposal to end bed blocking in England.

Ministers want to change the law so they can put greater pressure on local authorities to find suitable after care for patients, and free expensive beds on the wards for others in need of acute treatment.

The charge, £120 in London and the south-east, and £100 elsewhere, would start from the end of the three days within which a hospital discharge plan will have to be prepared, or the day after the decision that a patient is ready and safe to leave hospital, whichever is the later.

The figures have been chosen because they are judged sufficient to give social service departments the cash incentive to speed patients' transfer, either back to their home with extra help, to a residential home, or to some other form of intermediate care. The NHS will also have to be more active in arranging such transfers and start the planning early. The government is still drawing up a mechanism for ensuring there is no conflict between hospitals over whether a patient is ready to move.

Jacqui Smith, the health minister, said: "It is bad for an older person to be delayed in an acute hopsital bed once ready to leave. They may lose the confidence to regain their independence when they return home, or be at risk of infection and losing mobility."

The measure is in line with the government's philosophy of ensuring funding moves with the patient. It is based on a Swedish model, but local government leaders are likely to argue that the situation in that country is different, since more care homes are directly provided by public bodies. In England social services fund most places in private homes.

Measures to provide more places through a £300m grant last year seem to reduced the number of people over 75 staying in hospital. Delayed discharges for patients of that age fell from 5,938 in the year to March 2001, to 4,691 last year. But that is too slow for ministers.

If the new funding system is introduced and is shown to work, it might be tried for mental patients experiencing delays in leaving hospital because of the lack of alternative care available.

Meanwhile, Alan Milburn, the health secretary, will today meet some of the first "flying doctors", surgeons and support teams brought in from abroad to help cut waiting lists, mainly for joint replacements and eye surgery.

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