If the gran isn't safe to live on her own then being on the list for sheltered housing is not worth it - that is still living alone! Are they in the UK? Assuming they are. If the gran is not able to be alone then she needs an assessment from social services to clarify suitable living environment and any support she needs to remain safe and as independent as possible.
If her health means she can't be alone at all but she is still mobile then it is likely she would meet criteria for a residential home of some sort. That can include emotional or mental health problems eg if she is physically well but too anxious to live alone, and it would be detrimental to her health to do so, then she should meet the criteria for needing support.
In a residential home she would get her own room and shared space like sitting/dining room. All meals / heating / washing etc would be done for her. If she has no money then SS will pay in full IF they deem her needing that level of support. No family etc would be expected to pay or make a contribution. There may be some limitations as to where she lives and the type of home she can go to - the SS would assess her eligible needs and then give a monetary figure to meet those needs. If she wanted somewhere above that figure, ie the nice private expensive home down the road with a wine list instead of the basic no-frills but does what it needs to home with SS places, then she/they would need to top up the difference. Depending on where she lives there ought to be some choice though.
It's all well and lovely to support family if you can, but thankfully (at the moment at least!) the system in the UK should take over in those instances where it isn't possible. Although a better configuration of living space might be possible it isn't going to work if gran isn't safe alone. And people tend to get worse as time goes on, not better.
I think the first step is to get SS to do an assessment. They are all skint at the moment and if they say she is living with them and it's all fine they will likely try and say there's no problem - so you need to get her / SIL to insist she needs it and explain that she isn't safe in the current living conditions. Even if they say she doesn't need a residental home, if she is unable to do some of the daily activities of living eg make a drink or meal, completely independently then she should be entitled to some SS support.
Good luck