The system of paying for long-term care of the elderly is "chaotic and unfair", Alan Milburn, the Secretary of State for Health admitted yesterday.

In a speech which touched a raw nerve at the Royal College of Nurses congress in Bournemouth, Mr Milburn dropped the heaviest hint yet that the Government may introduce free nursing care for all.

Without mentioning the Royal Commission on the funding of long-term care for the Elderly, to which the Government's response is still awaited more than a year after it was published, Mr Milburn referred to the need to support dignity in old age. He added: "The prospect of free nursing care could allow us to do more."

The RCN has been a severe critic of the current system under which patients in hospital, at home, or in old people's homes, get nursing care free on the NHS while for those in nursing homes it is means tested. The Royal Commission recommended all personal care, including nursing care, should be free.

The RCN has made estimates of the cost of providing free nursing care ranging from £220m to £600m a year - depending on how tightly it is defined. The Royal Commission said the cost of providing free personal care, defined as any care which involved touching the patient, would be £1.2bn in the first year.

At the end of his speech which included a package of measures to woo nurses and win support for NHS modernisation, Mr Milburn was questioned by Paul Phillips, a nurse from Renfrewshire in Scotland.

To prolonged cheering from the 2,000 delegates present, Mr Phillips demanded that the Government implement the Royal Commission's recommendations "and put an end to this state-supported robbery of our patients".

Visibly chastened, Mr Milburn said he understood the strength of feeling on the issue and promised a government announcement would be made in May. "The system we have is the worse combination of being chaotic and unfair. I mentioned free nursing care in my speech for a specific reason. We are looking at it very closely. We are taking it very seriously. Your views are very close to my own on this one."

Later Christine Hancock, general secretary of the RCN, said she was surprised by the minister's remarks. "It does feel as though the argument has almost been won," she said.

Mr Milburn's admission was one of a series of sweeteners aimed at persuading nurses that they would see rapid change in the NHS. He announced that NHS trusts are to be set explicit standards on cleanliness for the first time in response to rising concern over dirty wards and the increasing risk of infection.

Nurses claim hospital wards have become dirtier in the last decade since cleaning services were contracted out to private companies. Poor hygiene levels were partly blamed in a National Audit Office report last month for the 100,000 patients a year who contract an infection while in hospital. The NAO report estimated that 5,000 deaths a year were due to hospital-acquired infections, which were costing the NHS £1bn a year to treat.

Ward sisters are to be given their own budgets of an initial £5,000 to upgrade their wards and an extra £4m is to be spent on leadership training - a gesture to calls for a return of matrons.

As well as increasing numbers of nurses, Mr Milburn returned to a favourite theme by pledging to "liberate their potential" by breaking down professional barriers and expanding the range of work they did. "The opportunities for nurses have never been greater. We are putting nurses at the centre of the modernisation of the NHS. We have to liberate nurses so that you can be leaders of change."

Although he was cheered and applauded, nurses remained sceptical about his capacity to deliver. In a vote taken immediately after his speech, one in three said they were not "reassured" that the NHS was safe in Labour hands.