  A method is proposed to improve the accuracy of approximate techniques for
strongly correlated electrons that use reduced Hilbert spaces. As a first step,
the method involves a change of basis that incorporates exactly part of the
short distance interactions. The Hamiltonian is rewritten in new variables that
better represent the physics of the problem under study. A Hilbert space
expansion performed in the new basis follows. The method is successfully tested
using both the Heisenberg model and the $t-J$ model with holes on 2-leg ladders
and chains, including estimations for ground state energies, static
correlations, and spectra of excited states. An important feature of this
technique is its ability to calculate dynamical responses on clusters larger
than those that can be studied using Exact Diagonalization. The method is
applied to the analysis of the dynamical spin structure factor $S(q,\omega)$ on
clusters with $2 \times 16$ sites and 0 and 2 holes. Our results confirm
previous studies (M. Troyer, H. Tsunetsugu, and T. M. Rice, Phys. Rev. $ B 53$,
251 (1996)) which suggested that the state of the lowest energy in the spin-1
2-holes subspace corresponds to the bound state of a hole pair and a
spin-triplet. Implications of this result for neutron scattering experiments
both on ladders and planes are discussed.
