A landmark £670m a year package outlined in the Personal Care at Home Bill will help hundreds of thousands of people stay in their own homes instead of being moved into residential care, health secretary Andy Burnham has said.

But the Personal Care at Home Bill came under fire from the Liberal Democrats, who claimed it would help only a fraction of the 400,000 people Mr Burnham said would benefit from the free support on offer.

There has also been controversy over how the free care will be funded, with local councils having to foot some of the bill to help care for the sick and elderly in their own properties.

Opening the Commons second reading debate on the bill, Mr Burnham said the legislation was a “significant moment” as it marked the beginning of a fundamental overhaul of care services in England.

“It will provide real support to over 400,000 of the most vulnerable people in our constituencies.

“This includes people with advanced conditions such as Parkinson’s, dementia, Alzheimer’s and motor neurone disease.

“They are the people with the greatest needs who require intimate personal care in all aspects of their daily lives.

“These are people who, as their condition has deteriorated, will already in many cases have paid significant sums out of their own pockets towards the cost of their care.”

The bill also supports people who may have suffered a fall or other health setback and are at risk of needing long-term care.

It would “end the lottery in home care” across England and make the existing system fairer now before the fundamental reforms necessary to meet the government’s long-term goal of creating a national care service.

The Department of Health would provide £420m, with the rest made up from local authority contributions.

The bill received an unopposed second reading.