It follows an increase in local referrals.
Within the past year, the city council has seen a 13% increase in referrals to their dedicated mental health and complex needs team and a 30% increase in supported living placements for working age adults.
Currently, the city council funds 38 beds over four sites with private bathroom and kitchen facilities in most locations.
The city council is proposing to expand the number of beds available by a further ten, modernise the facilities on offer and introduce a complex needs service that can help the most vulnerable residents with medication and personal care at the start of their recovery.
A decision to commission new services and invest more than £3.5million over five years will be made next week during a council meeting on 30 January, with the new services expected to start in late 2024.
Cllr Emily Darlington, Cabinet Member for Adults, Housing and Healthy Communities said: “Just like councils across the country, we are seeing a huge increase in need for mental health support outside of the hospital.
“We want to invest in our short-term accommodation, prepare for additional referrals and build in additional, specialised care. This is about helping people to live independently in the longer-term, offering the right support at the right time.