Elderly people in England are to be given cash to fund their own social care, the health secretary has said.
The elderly or their relatives will decide how the money is spent
From April, millions of pensioners will be handed control over how the money is spent, rather than relying on social workers to make the decisions.
Alan Johnson, who officially announced the scheme on Monday, said it was a "radical transfer of power from the state to the public".
Younger disabled people could also be allocated a "personal budget" for care.
Councils will be given £520m over three years to improve services.
Individuals will be means-tested to assess their health and personal needs, and councils will then pay the cash into their bank accounts or those of nominated relatives.
According to the government, the changes are designed to create more competition among care agencies.
Mr Johnson said: "Our commitment that the majority of social care funding will be controlled by individuals, though personal budgets represents a radical transfer of power from the state to the public.
"Everyone, irrespective of their illness or disability has the right to self-determination and maximum control over their own lives."
Prime Minister Gordon Brown said the measures would give "real control" to individuals.
"These proposals for personal budgets will allow all those who would benefit from a personal budget to receive one, putting real control into the hands of those in care and their carers, leading to far more personal and responsive care."
Chairman of the Local Government Association Sir Simon Milton described the change as a "landmark agreement" and said it "should provide the foundation to give people independence, choice and dignity over their lives."
He added: "Given the pressures arising from an ageing population and rising expectations, we are pleased the government has also recognised that change comes at a price.
"The new grant for social care reform will go some way to enable councils to move towards a more personalised and preventative system of care."
But the plan did not go far enough for Liberal Democrat leadership contender Nick Clegg.
"This should only be the first step in a complete revolution in healthcare in which local communities hold health managers accountable through the ballot box, and every one of us is given real entitlements to high standard care wherever we live."
However, campaign group Age Concern did welcome the scheme.
Director general Gordon Lishman said: "It is absolutely right to put older people's needs at the centre of the care system and to place a clear emphasis on preventive services.
"Older people and their families will continue to need information and support to help them negotiate the best care package at the best price with care providers.
"This will be challenging but we are sure it is something the government will want to address."