A total of £1.4bn will be made available over three years to help increase the fee rates local authorities pay to care providers.
Further funding of more than £1bn will be available for local authorities in 2022/23 to fund social care.
The government said this will help councils respond effectively to rising demand and cost pressures.
This is on top of the £300m announced last week for workforce recruitment and retention, taking the total to £462.5m.
Commenting, Health and Social Care Secretary, Sajid Javid said:
“It is vital we continue to do all we can to protect social care during the pandemic and it is more important than ever the sector takes advantage of its priority booster status since the emergence of the Omicron variant.
“At the same time, we need to plan for the longer term and this money and the details confirmed will help do that.”
Many local authorities pay care providers less than the cost to deliver the care, which the government said results in higher fees for self-funders and a lack of investment.
The government said this needs to be addressed to make social care more accessible and payments fairer, which is one of the pillars their ten-year vision for adult social care reform, People at the Heart of Care, is based on.
This £1.4bn will help local authorities to support a fairer cost of care and is part of the £5.4bn Health and Social Care Levy, which the government said through charging reform will protect people from unpredictable care costs.
They said it will also move to a position where people who fund their own care will be able to access the same fee rates for care in care homes than that of which local authorities pay.
The transformed social care charging system, which includes an increase in state support, will apply to people in both residential and at-home care.
It will set daily living costs at a lower rate than originally proposed, helping people save more money and will mean nobody is forced to sell their home in their lifetime, the government said.
Together with the money from the Local Government Finance Settlement, this will sustain and develop the care sector in communities across England with overall local government core spending power increasing by 4%.
Minister for Care, Gillian Keegan added:
“The measures announced in the past six months, and those to come on integration early next year, will mean transformational change for social care.
“Not only are we tackling the immediate challenges of Covid-19, but the longer term need to reform adult social care.
“This is the start of the journey but one we will take alongside caregivers, providers, local authorities and those receiving care.”
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