Lancashire Council is proposing to cut its residential care homes from 48 to 13 because it cannot afford to implement the new care standards.
The residents of the homes are likely to be reassessed and transferred to private homes or nursing care.
Cabinet member for social services Chris Cheetham said the council did not have the necessary resources to make the improvements and carry out other maintenance work.
"We'd need to spend £14.5m between now and 2007," he said. "If we do nothing then the homes will close in 2007 because they won't meet the standards."
Instead £9m is to be spent refurbishing 13 homes on their current sites, which will provide 572 places, fewer than half the 1,200 currently provided.
The council, which is on special measures, was criticised in a Social Services Inspectorate report for putting too many older people into residential care. It has subsequently sought to reduce the numbers.
The council will make a decision on the proposals on 1 July and is asking for responses to the consultation by 14 June.
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