Free personal care will not be provided for disabled people in Wales, despite a pledge at the 2003 assembly election.
Scotland introduced free personal and nursing care in 2002
The Welsh Assembly Government blamed legal issues over definitions of "free" and "disabled," and pointed to evidence from Scotland where demand for free care rose after it was introduced.
Labour said it would target funding towards disabled people on the lowest incomes who paid for personal care.
But the news has angered disability groups and opposition parties.
The Coalition against Charging Cymru - which includes groups such as Help the Aged, Disability Wales and Carers Wales - said it was "shocked and dismayed".
About £50m had been allocated to pay for the manifesto commitment in the budget.
However, the assembly government said that figure had been revised upwards to between £74m - £76m over three years to pay for the measures announced on Wednesday.
Health Minister Brian Gibbons told AMs the package would include measures to improve services and reduce the impact of charging for them, and came on top of a £45m increase for adult social services in 2006/07.
Dr Gibbons said: "This package is designed to benefit older people, disabled people and those who care for them.
"The funding will go towards improving services, including significant investment in helping people stay in their own homes. I am also planning to extend relief from charging for personal care at home."
Dr Gibbons says his funding will further cut home care charges
The announcement follows publication of research into the policy proposal by Professor David Bell of Stirling University.
Dr Gibbons said Professor Bell's report made it clear that "at the current time we could not put in place our original plans equitably and affordably".
The health minister said home care charging arrangements would be kept under review.
He added: "While this work goes on, I know the package I have announced today will make a real difference to those who depend on these services".
Rhian Davies, of the Coalition against Charging Cymru, said the assembly government had "abandoned its manifesto promise".
Ms Davies said: "This policy would have made a positive and significant difference to many people who rely on support to maintain their independence to live at home along with their carers, families and friends. The policy would have helped some of the poorest members of society.
"Today's announcement allows the existing postcode lottery and aged discrimination to continue along with all the other anomalies and injustices to continue.
"The additional investment in social care announced by the minister is welcomed but this in no way compensates for the loss of this important policy."
Plaid Cymru's Helen Mary Jones said it was a "betrayal of disabled people across Wales who were promised by Rhodri Morgan in 2003 they would receive free home care".
Conservative Jonathan Morgan said: "For Labour to knowingly mislead the people of Wales about such an important issue as free home care for the disabled is nothing short of a national disgrace."
Liberal Democrat Jenny Randerson said: "Labour stood in 2003 promising free home care for the disabled. But now they are tearing up their manifesto, pledge by pledge".