In a Commons statement, Frank Dobson said an extra pounds 700m would be invested over three years to create a system that was "safe and sound for both patients and the public".
Reiterating his belief that care in the community had failed, Mr Dobson said changes to the system were urgent and necessary. "Its failure to deal effectively with the most severe cases has dealt a blow to all mental health efforts and lost the confidence of the public."
Mr Dobson told MPs that the Home Secretary, Jack Straw, and he were looking at plans to create a new form of "renewable detention" for people with severe personality disorders who were thought to pose a grave risk to the public.
At present the Mental Health Act covers only those with "treatable" conditions.
If the new plans are adopted, this category would cover people such as Michael Stone, who was convicted of murdering Lin and Megan Russell and who suffers from an untreatable psychopathic disorder.
Mr Dobson said renewable detention raised all sorts of ethical and practical problems. "But we are convinced the safety of the public must be the prime concern," he added. A national service framework to spell out the mental health services needed for every part of Britain will be put in place and the National Institute for Clinical Excellence will issue guidance on the most effective treatments for mental illness.
The Government will invest an extra pounds 510m over the next three years in NHS mental health services, bringing the total extra investment in mental health services over that period to about pounds 700m.
"At the end of three years we expect to see more secure beds; access to new drugs; assertive outreach teams where they are most needed; more day and respite care; more supported accommodation and improved services for children and adolescents," he said.
The minister said the plans were "far-reaching improvements" to a system that had "suffered from ineffective practices, an outdated legal framework and lack of resources".
He said confidence in the service was "in crisis - mainly because it isn't coping with the small minority of mentally ill people who are a nuisance or a danger to both themselves and others".
But the Conservative Health spokeswoman, Ann Widdecombe, told MPs: "The view of the profession is that care in the community has been an overwhelming success, and it is only a small number of inappropriate discharges that have caused quite justifiable concern amongst the public."
She told Mr Dobson that a major factor in patients' defaulting on medication was the rationing of the latest anti- psychotic drugs.
Simon Hughes, for the Liberal Democrats, urged the Government to put more money into mental health care. "It would be better as a policy not to be tough on care in the community but to be tough in providing resources for care in the community," he said.
A review of mental health legislation in Scotland was also announced by the Scottish health minister, Sam Galbraith, to report back by summer 2000.
Mental health charities, the British Medical Association and the National Association for the Care and Resettlement of Offenders broadly welcomed Mr Dobson's announcement
But Cliff Prior, the chief executive of the National Schizophrenia Society, said the proposed reforms were not backed by enough money, describing them as "the right menu but in small portions".Reuse content