Elderly people must receive a minimum level of state-funded social care in a radical overhaul of the current system, the Government heard today.

Sir Derek Wanless called for long-term investment in care services for older people and for means testing to be scrapped.

The new proposals would cost an extra £1.7 billion of public money each year based on current levels and would see spending on social care more than treble over 20 years.

Unveiling his plans at a conference in London, the former NatWest Group chief executive criticised the present system which, he said, saw most money directed towards a small group of people with a high level of need.

That meant many older people with lesser - but still significant - needs received no help at all. He said: "To provide good social care for older people in England in 20 years' time and meet people's expectations, we will need to devote a larger share of our national income to social care.

"We need to ensure all older people are able to remain as healthy and independent as possible. The current system is failing to do this and is too focused on a small number of older people with the most significant social care needs."

His report, called Securing Good Care for Older People, was commissioned by the health think tank the King's Fund.

He proposed a "partnership model" that would see an agreement set up between the Government and the individual. As part of the model, everybody would be entitled to free basic care based upon the current level of service on offer.

This would make up 66% of a package and people would then have the option to pay a "top up" for extra services. This "top up" could be paid for from savings or as part of a payment plan like a pension, and every pound would be matched by the Government to a set limit.

Those on low incomes could have their "top up" paid though a restructuring of their benefits.

Sir Derek called for more people to be cared for in their own homes - something research showed people wanted. His model would also provide more support for carers, more hours of nursing care, and services for people with conditions like dementia.

The report was warmly welcomed by many charities who argue means testing is unfair. Age Concern director general Gordon Lishman said: "This groundbreaking report has rightly highlighted the enormity of the social care crisis gripping the nation and will hopefully pave the way for a long overdue debate. The report's recommendation to scrap means-testing for personal care will be very popular."

Care services minister Liam Byrne said he welcomed Sir Derek's focus on allowing people to stay in their own homes, but he said the model would not eliminate means testing completely.