The 25-year contract with the borough council and primary care trust in Hammersmith and Fulham means Care UK will create 158 nursing home places for older people. The nursing homes will be located at Queen Caroline's Street, Hammersmith and Farm Lane, Fulham.
Working with Hanover Housing Association, Care UK will also provide 32 self-contained retirement flats, which will provide 24-hour support for up to 34 older people. The Queen Charlotte's Hospital site at Ravenscourt Park will accommodate the ExtraCare retirement estate.
Care UK will also provide respite and rehabilitation services for older people and new facilities for day services for older people with mental health needs.
The construction work started in September and will take between 12 to 18 months to complete - the new services are scheduled to open between autumn 2005 and spring 2006.
Mike Parish, chief executive of Care UK said "this is a landmark development in terms of public & private sector co-operation. This will provide facilities well overdue for older people who want to remain in the borough and I am sure they will warmly welcome them."