The Royal Commission's recommendation - free "personal care" for all, with means-tested payment for living costs such as food and accommodation - would be popular but the Prime Minister's policy unit and the Treasury believe it would mean raising too much money in taxation to pay for the long-term care of the better off.
Frank Dobson, Secretary of State for Health, announced that there would be a period of consultation on the report, but it is unlikely that it will be accepted in full by the Government. MPs said last night they expected early action by lifting or abolishing the pounds 16,000 limit on assets, which has forced some home owners to sell their houses to qualify for free care.
The sense of injustice felt by families forced to sell parents' homes, which is still being enforced by social services departments, led to promises of action by Tony Blair at the general election.
The limit on assets could be raised to about pounds 60,000 - just below the average price of a three-bed semi - or scrapped, at an annual cost of up to pounds 220m, but long-term solutions are more difficult. Mr Dobson told MPs: "This is a complex issue and there are no easy solutions. We have to get this right."
The Tories and the Liberal Democrats accused the Government of dithering last night. The Royal Commission was seen as a way of relieving the pain, but its report has left the Government with a problem over how to proceed.
The Treasury and Downing Street favour more means- testing, and a note of dissent added by two members of the commission to the majority report said: "To make personal care free for all those who are assessed as need it would make matters worse. In essence, it would transfer initially at least pounds 1.1bn rising to at least pounds 6bn in 2051 from the private to the public purse. This huge addition to the burden on public expenditure would not, however, increase spending on services for elderly people by a single penny."
The minority report called for people to be encouraged to take out private insurance schemes to contribute to long-term care, the solution offered by the Tories. Labour MPs said Mr Dobson would be "lynched" if he proposed private insurance. They expect the Government to adopt a combination of measures, including lifting the means-testing threshold on assets and possibly a contributory insurance scheme.
The Labour MP Malcolm Wicks, an expert on social policy, said: "It is a big problem and I urge the Government to come up with a big solution."
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