There are around 80 disabled rough sleepers in Lincolnshire waiting for just 10 new specialist accommodation units.
The housing will be used to look after homeless with special and complex needs, who often end up back on the streets time after time.
Ten units across Lincolnshire will be funded by a new government grant.
However, North Kesteven District councillors were told that the demand far outstripped the promised supply.
Some of the 80 people with complex needs currently have accommodation, but are likely to end up back on the streets soon.
There are around 50 homeless people currently sleeping rough on the streets of Lincolnshire, according to the council’s latest figures.
Lincoln and Boston have the largest populations with around 10 to 15 people each, with handfuls across other towns and districts.
Jemma Munton, the council’s Housing Partnership Manager, told the executive board: “It is not simply a roof over people’s head but about prevention so they continually going through a cycle of homelessness.
“This cohort can have trouble keeping down tenancies and that support is a great enabler to keeping these tenancies longer term.
“We have 80 people who are in need of this accommodation. A lot of them are in accommodation at the minute but are likely to lose that accommodation end up on the street due to their complex needs and are part of the cycle.”
Four of the new flats will be in Grinter House in North Hykeham, which is currently undergoing a refurbishment, with the rest being private homes across the county.
The funding also creates full-time support worker role to help the people with complex needs.
Councillor Ian Carrington said: “I think we should congratulate the team on winning this external funding. This a cooperative effort across the Lincolnshire but it’s no surprise that this council is taking a leadership role.
“We rarely talk about the morality of what we do in local government, but helping those who are least fortunate and sometimes those who are the most difficult to help is one of the moral hearts of what we do.”
Council leader Councillor Richard Wright said: “Whatever we can do to help the homeless in this area, we will do.
“The government proved during Covid that you can throw money at a problem but it won’t sort the problem – it’s the long term that’s the issue.”
He added that the Lincolnshire-wide scheme would make it easier to help transitory homeless who move between towns.
Additional reporting by David Bosworth