Thousands of elderly patients who are routinely placed in nursing homes after leaving hospital would be able to live independently if they were sent home instead and received medical care in the comfort of their own homes, ministers will be told this week.

Professor Ian Philp, the government-appointed National Director for Older People's Services, is calling for a transformation in the way health services respond to older people. In new advice to the NHS this week he has highlighted five key areas, in an attempt to persuade primary care trusts and hospitals that the £41bn a year currently spent on patients aged over 60 could be put to better use.

Assessing people at home after a hospital stay would not be any cheaper than assessing them in hospital - both cost around £150 a day - but it would be more cost-effective and humane, as thousands of patients would be able to continue living independently instead of going into an institution, says Philp.

'It's about bringing the hospital into the home, so that the person would have fairly continuous care, with nurses and physiotherapists coming in each day,' he said. He estimates that the 300,000 people in nursing homes could be reduced by a third. At present, more than half the people in residential care are taken there directly from a hospital ward and are given little choice.

Last month The Observer launched its Dignity at Home campaign , which highlighted how older people trying to access care and support services in their own homes faced huge personal-care bills, and were often forced to rely on over-stretched voluntary help.

Philp is adamant that much more care must be provided in the home, rather than patients being forced to make endless journeys into hospitals for assessments.

Falls are the leading cause of accidental death in England of the elderly, and accounts for one-fifth of all admissions to patients over 60, often because of hip fractures. But if patients are referred to 'falls teams' within the NHS, they can have their bone density measured and an occupational therapist can make their home safer, making falls less likely.

'When a patient has a fall, it can be a profoundly life-changing moment,' he said. 'It is a dramatic illustration to you that you are getting more frail, and that is often the moment when people begin to think of themselves as old.'