Care homes are to be invited to apply for a new excellence rating to allow residents to identify which are the best performers.
The Care Quality Commission scheme aims to reward homes which provide a gold standard of care beyond the norm.
There are more than 24,000 homes in England - the majority of which have been classed as providing good enough care.
The regulator hopes the new scheme will start in April 2012.
A consultation will be launched in May setting out the full details.
But the regulator is likely to be looking to reward those that provide top quality services and extra facilities.
This could include looking for qualifications staff have, the staff to resident ratio, the quality of food and range of activities provided.
At the moment, the registration system assess care homes on quality and safety. It a home is found to be meeting the minimum requirements it is given a registration, but there is little indication of just how good the service is.
CQC chief executive Cynthia Bower said she hoped the new scheme would rectify this.
"We do firmly believe that care providers should aspire to deliver the best possible outcomes. An excellence award can recognise best practice, be a spur to improvement for providers who already meet CQC's essential standards, and can help people who need longer-term care to make choices."
Martin Green, chief executive of English Community Care Association, which represents care homes, said the move was a "welcome development", but said he was concerned that care homes would have to fund it on top of the registration system, pointing out the fees being paid by the state to providers were being reduced.