Mr Burstow who led a review of residential care for the think tank Demos said retirement villages and adapted flats were needed as well as traditional care homes.
About 450,000 people in England live in residential care homes, but the numbers living in adapted housing known as extra care apartments or retirement complexes are much smaller.
Mr Burstow said this needed to change as the term residential care had become "fatally damaged" by recent scandals about abuse and neglect in homes.
He said another solution to help care homes would be to offer residents "tenancy rights" when they move into the homes to give them more influence in how the homes are run.
"As we are living longer lives, housing with care is going to become increasingly important in helping us stay independent, happy and healthy.
"It is vital that government wake up to this reality sooner rather than later and helps create the right incentives to ensure older and disabled people have a genuine choice when they need to move."
"Housing with care" will become more and more important, said Mr Burstow
It is believed that less than 40% of land held by NHS trusts is used for hospitals and medical buildings.
But the Department of Health said it was working to free up land - although admitted it was not offering the incentives the Demos report called for.
Since 2010, NHS land with the capacity for more than 10,000 homes has been sold. Not all of this would have been used for housing for older people however.