Fife Council has pledged to eradicate the use of bed and breakfast accommodation for homeless people by March.
Instead, those without a roof over their head will be put up in a hostel, flat or other lodging until a permanent home is found for them.
The decision to remove B&Bs from the list of options came with a warning the decline in homelessness in recent years could be reversed by benefit cuts and changes to housing benefit and tax reform hitting private landlords.
Homelessness in Fife has fallen by 49% since 2012, but the use of temporary accommodation remains high as people face waits for suitable flats and houses to move into.
Head of housing John Mills said: “The reduction in homelessness has allowed us to look at the use of temporary accommodation in Fife and the removal of providing bed and breakfast as temporary accommodation is now an option.
“By reassessing the way we provide services in hostels, allocation of temporary accommodation and focusing on late access to empty scatter flats, this will allow us to move people from temporary to permanent accommodation much quicker.”
The change, expected to save £257,000 a year, was welcomed by Shelter Scotland deputy director Alison Watson.
She said: “From our work with homeless families and individuals we know that B&Bs do not offer the standard of accommodation or support people need to enable them to move on from the crisis of homelessness.
“Ending the use of B&Bs also makes good financial sense and we encourage all councils across Scotland to work towards ending the use of this type of accommodation for homeless households.”
Fife Council’s housing spokeswoman, Councillor Judy Hamilton, said: “The focus on preventing homelessness has had a positive impact for individuals and families and we can improve the privacy and dignity given to homeless people.”