Somerset County Council is withdrawing £1.2M from sheltered housing organisations.
It says the money will be diverted to support a greater number of vulnerable people, helping them connect with their families and community.
The council currently contributes £1.2 million towards sheltered housing schemes across the county, with the money going towards people with the highest need.
But that will change in the autumn as the council withdraws the funding, with housing associations and providers in the voluntary sector making up the difference.
Sheltered housing consists of two elements - designated accommodation, which is provided by a landlord and which the tenant pays for through rent and service charges, and support services, which include regular welfare checks and help to make contact with the local community.
Somerset is one of only six county councils in England which still contributes money directly to sheltered housing support services.
Around 3,500 sheltered housing tenants are currently supported in Somerset, with the majority having their needs met through the services laid on by the housing provider.
The council’s current contribution of £1.2m is targeted to around 370 to 380 individuals who were identified as having high-level needs.
Strategic commissioning manager Steve Veevers said that the council’s current support contracts would end on October 15.
Rather than continuing the service beyond this date, the money will be reinvested in Community Connect, which brings together social care providers, health service representatives and community organisations.