The Joseph Rowntree Foundation said the policy was likely to lead to a sell-off of bungalows, which are popular among the elderly.
It said 15,300 council-owned bungalows in England could be sold off by 2021.
Ministers say the plans will allow more money to be spent on new home building.
The Housing and Planning Bill goes before the House of Lords later.
If it is passed, local authorities will be compelled to sell expensive properties, as they become vacant, to pay for housing association tenants buying their homes at a discount.
The government says the plans are targeted at helping more people become home owners.
But the foundation is calling on ministers to make bungalows and sheltered housing exempt from the initiative.
This would bring England in line with Northern Ireland, where councils are not forced to sell bungalows or ground-floor flats under a similar initiative.
In the report for the foundation, researchers from Cambridge University said they had found that the high demand for bungalows meant they were almost three times more likely to be sold off and would be harder to replace because of the amount of land needed.
It also estimated that while bungalows make up 9% of council-owned housing, they were likely to make up 25% of high-value property sales because of their higher cost and more frequent vacancies - a result of people moving into residential care or tenants moving later in life.
One in five older people currently lives in a bungalow, a proportion which increases steadily from age 55 to 75, according to the report. This figure rises to one in four when there is someone sick or disabled in an older person's household.
Brian Robson, from the Joseph Rowntree Foundation, said the housing Bill would reduce the number of affordable homes at a time of an "acute housing crisis".
"We risk holding a great British bungalow sell-off that will make things worse for older and disabled tenants who are trying to find suitable, affordable accommodation," he said.
"The increasing reliance on costly, insecure tenancies in the private-rented sector to house families on low incomes will only serve to trap more people in poverty.
"Unless changes to the Bill are made, older people and people who are sick or disabled will be particularly badly hit."
The bungalows currently owned by Whitefriars and other housing associations in Coventry are also under threat.
