More than 800,000 older Australians will still get Meals on Wheels and other programs at home after Labor abandoned a plan to merge them into its under-pressure aged care system.

Health Minister Mark Butler announced a reprieve on Thursday for the Commonwealth Home Support Program (CHSP), the future of which had been in doubt as the government sought to fold it into its overhaul of the Support at Home program.

The Greens and Coalition were scathing of the government’s delay in backing down from the merger after a parliamentary inquiry recommended in June that the program be kept as a standalone until at least 2030.

Labor has now guaranteed funding for the program until at least mid-2029.

It is the third time Labor has made concessions to an unlikely alliance between the Greens and Coalition over its reforms to the ballooning $40 billion aged care budget, after non-government senators forced the government to provide more human oversight of the algorithmic assessments of client’s needs and got the department to fast-track 20,000 home care packages.

Butler said he had been sceptical for a while about the proposed merger, which Labor inherited from the Morrison government.

“[The two programs] deliver quite different services, drawing on quite different capabilities in the communities, and serving quite distinct needs on the part of older Australians,” he said.

He praised the work done by “terrific organisations like Meals on Wheels”, which had been delivering food to the elderly since the 1950s, and said he had been worried any changes had to potential to “undermine a lot of the social capital”.

Meals on Wheels Australia chair Paul Sadler said the move had saved the charity from closing services, jeopardising the work of more than 35,000 volunteers nationally.

The home support program funds entry-level services to help older Australians maintain their independence, including gardening, cleaning, transport, and food delivery services.

It is distinct from Labor’s Support at Home service, which offers clinical in-home care and has been plagued with challenges since its rollout began late last year.

Greens spokeswoman for older people Penny Allman-Payne, who chaired the parliamentary inquiry, said the government’s delay had left “older people and providers in the lurch” and some had even left the system.

“Labor’s plan to collapse [CHSP] into its struggling Support at Home program was reckless and dangerous, as the Greens inquiry showed,” the senator said.

Opposition aged care spokeswoman Anne Ruston said it was an “embarrassing, overdue backdown” from Labor.

“Let’s be clear, this was not a proactive decision from a government with a clear plan. Labor has left this decision until the last minute, just as they have done repeatedly throughout their chaotic aged care reforms,” Ruston said in a statement.

Chief executive of the Older Persons Advocacy Network, Craig Gear, welcomed the decision, saying more time was needed to consult on and develop reform to the program.