The health secretary, Andrew Lansley, has described the Dilnot report on elderly care as an "immensely valuable contribution" but warned the government needed to "consider carefully" the "significant costs" of reform.
Andrew Dilnot, the economist who chaired the Commission on Funding of Care and Support, said the existing funding system was confusing, unfair and unsustainable. The proposals for change would cost the government an initial £1.7bn a year – 0.25% of total public spending – which, Dilnot claimed, was "a price well worth paying".
The report, published on Monday, recommends a cap of £35,000 on the amount an individual would have to pay towards their own care costs during their lifetime. Above that level, the state would pay a standard rate for care, regardless of the individual's wealth.
People would still be liable for costs of accommodation and food in a care home, but this would be capped at £10,000 a year.
In addition, the commission is calling for a big increase in the threshold of savings and assets above which the state offers no help with care costs. The limit should rise from £23,250 to £100,000, it says.
Taken together, these two central recommendations of the report would ensure that no individual would have to spend more than 30% of their wealth on care. At present, many people are at risk of losing 90% of their savings and assets.
It also raised the prospect of a "specific tax increase" to cover the cost to the Treasury.
In a Commons statement, Lansley signalled that ministers may look at higher thresholds laid out as options in the report "to manage the system and its costs".
He said: "We will now take forward consideration of the commission's recommendations as a priority. The commission recognised that implementing their reforms would have significant costs which the government will need to consider against other funding priorities and calls on constrained resources.
"In the current public spending environment, we have to consider carefully the additional cost to the taxpayer of the commission's proposals against other funding priorities."
"And within the commission's recommendations, they present a range of options, including on the level of a cap and the contribution people make to living costs in residential care, which could help us to manage the system and its costs. That is why we intend to engage with stakeholders on these issues, including on the trade-offs involved."
Dame Jo Williams, one of three members of the commission, said ahead of Lansley's statement that the panel would be "disgusted" if the government shelved their recommendations for a shakeup of the system of care funding.
"It's time for action. It seems to us that people have already waited for change far too long and want more than talk now."
Dilnot said that although the commission wished to see its proposals implemented "with pace", it did not expect immediate acceptance by ministers and would be content if a white paper appeared before next Easter with a view to implementation in 2014.
Lansley told MPs that the report was never intended to address the full set of tests that reform in this area would need to meet.
The government would now work with stakeholders in the autumn, using the Dilnot recommendations as a "basis for engagement as a key part of a broader picture", he said, adding that the government would engage "directly" with the opposition "to seek consensus" on the future of long-term care funding.
The government's response to the reports by Dilnot and the Law Commission on social care legislation will be published next spring, and proposals for the reform of adult social care will be published in a white paper, alongside a progress report on funding reform.
"It remains our intention to legislate to this effect at the earliest opportunity," said the minister.
The shadow health secretary, John Healey, said the report would serve as a starting point, and he underlined Labour's offer to work with the government on developing his recommendations.
He urged people to take pride in Britain's rising life expectancy, which would result in 20% of citizens living until 100, adding: "Our children are likely to spend a third of their lives in retirement."
But Healey told MPs: "Many of us approach our old age in fear: fear we will need care that won't be there; fear our savings will be wiped out by the open-ended costs of care; fear we can't protect our families from this risk; and fear of becoming a burden or being left alone."
Sarah Newton, the Tory MP for Truro and Falmouth and a former director of Age Concern England, blamed Labour for repeatedly "kicking fixing our broken care system into the political long grass".
Lansley said there had been many false starts, adding: "It is very important for us to make progress on a basis that is sustainable for the long term."
