A royal commission has criticised the government over the care of the elderly.

The commission set up by the government in 1997 to review the issue of free personal care for the elderly across the UK warned on Monday that the issue had become "acute and a matter of major public concern".

Lord Sutherland of Houndwood, who heads the commission, warned thousands of elderly pensioners were being forced to sell their homes and be reduced to poverty before the state paid for their care.

He also highlighted that since the Scottish executive now paid for help with washing, cooking and eating there was now an inequality between different parts of the UK.

"Many of the current generation of older people and their families continue to feel betrayed by the failure of what they had been led to believe was a 'cradle to grave' welfare state to fund their care properly,'' he said.

"Some are struggling inappropriately with care at home because they cannot afford the residential care they need. Others are bitter at the enforced loss of their home, and of the dignity that goes with it, to pay for their care.''

Piling pressure on the government, the commissioners put the cost of free care at £1.1 billion - much less than the chancellor's own estimates.

"It cannot make sense to assert that this sum is not affordable. It patently is,'' they said.

The group also highlighted the anomaly of the current system where younger NHS patients suffering from diseases such as cancer had their care costs met by the state but people suffering from degenerative illnesses such as Alzheimer's disease had to meet their own costs.

"It is ethically impossible to justify this distinction. Payment of care costs should depend on need, not diagnosis,'' the commission said.

There was support for the demands for action from campaigners including Age Concern England.

"Older people and their families still struggle with a complex, baffling system. And despite record numbers of complaints to the health ombudsman earlier this year, nothing has been done to simplify care provision,'' said spokesman Gordon Lishman.

And Liberal Democrat MP Paul Burstow warned the government would pay politically for failing to act.

"Ministers are treating the elderly in England like third class citizens. Their failure to follow Scotland's lead and make personal care free on the basis of need should haunt Tony Blair,'' he said.