Community care reforms and tight eligibility criteria are combining to drive down the number of elderly and disabled people in residential care, according to the annual report on long-term care by market analysts Laing and Buisson.

In April 1999, there were 480,000 people living in nursing or residential homes and long-stay hospitals in the private, voluntary and public sectors.

This is the fourth successive annual fall in numbers and compares with a peak of 512,000 residents in 1995.

The report predicts a further fall of up to 50,000 over the next five years, with the private and voluntary sectors expected to lose half of the total.

Meanwhile, the Department of Health has denied that health secretary Frank Dobson is giving special thought to the idea that people entering residential or nursing homes will be given three months' free care before decisions are made about who should pay for their long-term care.

The idea was one of the recommendations of the Royal Commission on Long-Term Care, a DoH spokesperson said. Mr Dobson was considering the idea, but it was being given equal weight with all the other recommendations.

The Royal College of Nursing has sent Mr Dobson details of its first five reviews of health authority eligibility criteria, used for deciding who should receive free care and who should be means tested.

Of the five, only one HA has been found to have lawful criteria. Two have been found to be 'probably unlawful' in the light of the Coughlan judgement which has prompted the government to tell all HAs and local authorities to review their own criteria.

The remaining two HAs were found to have 'unclear' criteria. The RCN is sending its detailed findings to the five HAs, which are located 'all over the country'. It is not publicly naming them.

Care of Elderly People Market Survey 1999. Laing and Buisson. 0171-833 9123.£375.