Warning that record numbers of homeless threaten to overwhelm New York's budget, Mayor Michael R. Bloomberg (R) on Wednesday announced an ambitious new five-year plan to house more families and provide housing with support staff for homeless adults who suffer mental illness.

His plan would build 12,000 apartments, replete with social services, for homeless adults. It proposes to pour money into rental subsidies for homeless families and to provide anti-eviction legal services in the six New York neighborhoods that produce a quarter of all the city's homeless families.

"We have to recognize the costs and failings of our own best intentions," Bloomberg said. "This morning, some 38,000 people -- including 16,000 children -- woke up in city shelters."

The human and budgetary stakes have never been higher for the city. In the past four years alone, the daily census of homeless families in the shelters has spiraled upward, from 23,712 to 38,310. More than 16,000 children now live in the shelter system, often with dire effects on their health. City spending on the homeless has doubled in the past five years, to $700 million.

Bloomberg pledged to reduce the homeless population by two-thirds, and to plow savings back into housing programs. He has earmarked $12 million to seed these programs, but his aides acknowledge the eventual cost will run into tens of millions of dollars. His proposal rests, in part, on federal housing programs that the Bush administration has proposed slashing.

"We are very pleased that the mayor has articulated a plan for building 12,000 units of supported housing for homeless adults," said Mary Brosnahan of the city's Coalition for the Homeless. "But the real dollar numbers needed to make this kind of change are shockingly absent."

Bloomberg framed his plan as a departure from previous city policy, which he described as focused on warehousing families in shelters. "Because we've relied on shelter as our only housing policy tool, our shelter population continues to grow," he said. "A system designed to provide an emergency safety net has instead become semi-permanent housing."

Homeless families now spend an average 11 months in the shelter system. Thirty-percent of those families who move into permanent housing wind up back in the homeless system within 10 years.

But Bloomberg's proposal to re-orient the shelter system is not unprecedented. In the late 1980s and early 1990s, Mayors Edward I. Koch (D) and David N. Dinkins (D) pumped billions of dollars into the rehabilitation of thousands of apartment buildings and reserved many subsidized apartments for the homeless. Their administrations also built 10,000 units of housing for the mentally ill homeless.

By 1990, the number of homeless in the shelters had bottomed out at about 18,000. Mayor Rudolph W. Giuliani (R) took office in 1993 and decided the city could no longer afford such ambitious programs. He cut back on funding for housing and tightened eligibility for the shelters. But he made these changes as the city experienced a sharp increase in housing costs.

"You had a shockingly sharp rise in rents and tightened eligibility for homeless families," said Patrick Markee of the Coalition for the Homeless. "It's been a perfect storm for the homeless."