Until the mid 1950s, the management of persons suffering from chronic mental illness in Australia was the responsibility of the large mental hospital. With the advent of psychotropic drugs and concern about the ‘negative’ influence of the institutional environment on patients there was a shift to shorter but more frequent periods of hospital admission. As the pattern of shorter admissions increased, community services for the mentally ill were expanded in the early 1970s. Between 1950 and 1985 in the state of New South Wales, the numbers of patients in large mental hospitals decreased from 256 to 55 per 100 000 population. However, no special arrangements for accommodation, as distinct from treatment, were made for these ex-mental hospital patients. The decline in hospital numbers can be attributed to a general reduction in the length of hospital stays. Initially, there seemed to be no pressing need for extra accommodation in the community as the provision of social security benefits was adequate to allow patients without homes to afford basic accommodation, a situation different to that in the United States (Lamb, 1984).