Half of the £520 million set aside for the Putting People First reforms will come from the NHS budget and will be given to local councils over the next three years. From April, individual budgets will be introduced for anyone eligible for adult social care funding.
Recent pilots of personal budgets for disabled and elderly patients were hailed as a success.
The accompanying report suggests that the reforms should eventually cover long-term conditions, as suggested in Lord Darzi's interim report earlier this year. No target date for this has been set.
Spanning six government departments, the reforms allow direct payments into the accounts of people means-assessed to receive public funding, giving them the choice of care services previously only available to those who fund their care themselves.
Health secretary Alan Johnson said it was a 'radical transfer of power from the state to the public'.
The reforms will increase competition between care providers to ensure excellence rather than merely meeting minimum standards, the health secretary said.
Local Government Association chairman Sir Simon Milton said the 'landmark' reforms would provide people with 'independence, choice and dignity'.
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