Burstow, who lost his role in the recent Cabinet reshuffle, told the Telegraph that Osborne refused to sign off the £1.7bn needed to implement the proposals.
The claim, which the Treasury has rejected, forms part of a current Liberal Democrat shift towards challenging Government austerity policies.
According to Burstow, plans for a review of care services based on the proposals of economist Andrew Dilnot, have been finalised but the Treasury has refused them.
“The thing that has kept Dilnot alive has been the Deputy Prime Minister Nick Clegg saying this has got to stay on the table, while there was a desire by the Treasury to get it in the trash bin as quickly as possible,” he said.
A key proposal in the Dilnot review is capping the amount that individuals have to pay for their own care at £35,000.
The Government has expressed support for the principle of capping, but has not committed to a figure or a mechanism for making the funds available.
One option being considered is allowing individuals to opt into a capping scheme by paying an initial fee.
Burstow claimed that the barrier to implementation of the Dilnot proposals was partly “inertia” and partly fear that any reform of social care would incur the same negative reactions as the NHS reforms.
However, he argued, David Cameron and Nick Clegg “probably hadn’t tuned into enough at the time to see the fact that this was a popular set of changes, not a controversial set of changes”.