The demolition of buildings at a hospital-home for disabled ex-servicemen will begin at the end of next month.
Workmen will remove a leisure activities block, boiler house, bungalow and laundry to make way for a £4 million extension to Gifford House in Boundary Road, Worthing.
A special appeals committee under the chairmanship of Ian Eady has been set up to help raise the money for the scheme.
Under new government rules on care standards, Gifford House, the Queen Alexandra Hospital Home for Disabled Ex-Servicemen, had to provide en suite rooms for all of its residents.
Gifford House tried to apply for an exemption, stating that many of the residents preferred to share rooms with their friends but this was turned down.
The Government then faced a barrage of criticism following the mass closure of rest homes unable to afford expensive upgrades by the 2007 deadline.
With the situation reaching crisis point in the South-East, where many elderly people choose to live, Whitehall relaxed its deadline but Gifford House still decided to proceed with plans to build 22 en suite rooms with enhanced rehabilitation facilities.
A spokesman said: "All planning for further conversion of our current rooms from multiple to single occupancy has been stopped until the new building is completed in 2005.
"Many of our gentleman residents have received that news with relief, for there are some who prefer shared wards rather than single rooms.
"We shall review our financial situation in two years' time to see whether it is financially practical to proceed with yet another highly disruptive conversion, taking years to complete and costing an extra £2 million at present estimates, and producing no additional beds or facilities.
"With regards to the new block, the ground floor will house the physiotherapy department and also the leisure activities department together with a rehabilitation kitchen with facilities for teaching IT skills to residents.
"The first floor will have 22 single rooms with en suite facilities, which means we could also admit female residents if we so wished."
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