Edward Davey says the dogs could save councils millions of pounds and give some disabled people the freedom to return to work.
The dogs help people with things like getting dressed or taking tablets but Mr Davey believes not enough councils know about them.
He wants the government to issue new guidelines showing clearly public money can be used to fund the dogs.
Mr Davey says the Canine Partners for Independence charity, which has 60 trained dogs, shows what can be achieved.
'Rule change needed'
Most of the 600,000 people who need a carer to come into the home have one provided by social services.
That can cost councils between the minimum wage and more than £20 an hour for weekend overnight care.
Only 7,800 people receive direct payments which enables them to choose what care they have, which could include using a dog.
But Mr Davey told BBC Radio 4's You and Yours programme a change in the law was needed to allow social services departments to provide the dogs as part of a local authority homecare package.
Current government rules mean they can only supply human beings.
But Mr Davey said: "I can't see why you couldn't actually write in the benefits of a dog to the individual and the dog can be seen as providing caring services."
Savings
The MP argued too few councils knew about such schemes.
"The experience of Canine Partners For Independence is that many social service departments haven't come across this fabulous solution," he said.
As well as giving disabled people independence, it meant less carers were needed and thus saved money, said Mr Davey.
One woman using one of the dogs used to need a 24-hour-a-day care package, costing about £1,000 a week.
With the help of a specially-trained dog means she now needs just 35 hours care, saving her local council £650 a week.
At that rate, the £9,000 cost of training a dog could be recouped in 13 weeks.