A new £6.5 million dementia care home is to be built on the site of Franklin House.
Planning permission has been granted for a dementia care and supported living housing development in Redford Avenue, Sutton.
Housing 21, a provider of housing services, care and health services for older people, has announced it will provide 40 specialist dementia extra care apartments along with nine apartments to enable supported independent living for adults with learning disabilities.
The extra care apartments for people with dementia will have communal space as well as a guest suite for visiting relatives and friends, an assisted bathroom and a buggy store.
For those that need it, staff will also be on hand to provide help and support 24 hours a day.
Councillor Colin Stears, chairman of the Adult Social Service and Health Committee said: "Providing our older residents with appropriate supported housing, is and always will be a top priority for Sutton Council.
"We are pleased to be working so closely with Housing 21 and its partners to provide local people with 21st Century facilities that will assist older people to live independently."
David O'Neill, head of strategy delivery for Housing 21 said: "We are delighted that planning permission has been granted for this specialist extra care scheme at Franklin House.
"We now look forward to working further with the London Borough of Sutton and our partners Quattro Design Architects and Denne Construction to bring this project to fruition."
The scheme will be partly funded with a grant of £1.6 million from the Homes and Communities Agency.
In 1999 four possible sites were outlined for a state of the art care facility in the borough - Carshalton War Memorial Hospital, Sutton Hospital, Orchard Hill and Franklin House.