Places for the elderly have dropped by more than 10,000 in the past year

Analysts Laing and Buisson found that more than 10,000 places for those needing long term care were lost last year.

While the government has increased the amount of money it puts into homes, the number of beds available has dropped by 13% since it came to power.

The private companies which run many of the homes blame local councils for not putting enough money into elderly care, while the councils blame the government for the lack of cash.

"The continuing decline in care home capacity is particularly worrying," said report author William Laing, "because of evidence that demand for care homes has stabilised and the prospect of increased demand from 2005, when a resurgence in population ageing is expected to commence.

"Without new investment in care home capacity consumer choice is threatened, the government will find it more difficult to achieve its delayed discharge targets and local authorities will have to work harder to avoid the fines, which will begin to be levied from January 2004."

Mark Fowler, who runs the private Southlands Nursing Home in Hampshire, said the government should be prepared to put more money directly into the homes.

I can't understand why they would shut it Francis Manning, 90

"If they want quality care, they have to pay the right price for it," he told BBC One's Ten O'Clock news.

"It's no good just going year on year and saying inflation is 3% we'll add 3% to the fee."

Sometimes it is the private homes owners themselves who shut their homes simply to cash in on the property market.

Whichever is to blame, it is little consolation to people like 90-year-old Francis Manning, reports BBC correspondent Niall Dickson.

Her husband Bill was in a home nearby to where she lived until it shut.

Waiting lists

Now he lives many miles from her.

"I can't understand why they would shut it," she said. "Because it's quite a nice place."

The problem is creating a crisis in many hospitals.

At Andover in Hampshire, for example, 40% of patients are well enough to leave but there is nowhere for them to go.

"It means that other patients suffer as a result because the waiting times get longer," said Barbara North, chairman for Winchester and Eastleigh Health Care NHS Trust.

"We have to occasionally cancel operations and it puts enormous pressure on our staff."

Liberal Democrat MP Paul Burstow said: "The care home sector is now in meltdown.

"Care home-owners are disillusioned, discontented and disaffected, yet ministers are still in a state of denial about the scale of the crisis."

'Addressing problem'

He added: "These figures show the exodus from the care home market is still accelerating.

"While ministers bury their heads in the sand, the victims of these closures are the frail elderly people whose lives are lost through the trauma of an eviction from what they thought was their home for life."

Shadow Health Secretary Dr Liam Fox MP said: "Despite all their spin, the catastrophic loss of care home beds for the elderly is continuing apace.

"Far too many vulnerable of our community's sick and elderly people are paying the price of a system dominated by bureaucrats not patients."

Adrian Osbourne, spokesman for Hampshire and Isle of Wight Strategic Health Authority, said it is trying to address the problem of local nursing home places.

In partnership with Hampshire County Council it is working towards building an additional 500 nursing home places, he said.