Andrew Lansley, the Health Secretary, has set out terms of reference for the Commission on the Funding of Care and Support.
The Commission will look at various funding options including voluntary insurance and partnership schemes aimed at addressing the needs of an ageing population.
It is to be chaired by economist and broadcaster Andrew Dilnot, who is principal of St Hugh's College, Oxford. Former health minister Lord Norman Warner and acting chair of the Care Quality Commission and former Mencap chief executive Dame Jo Williams.
It is to report by July 2011 and then joined by a white Paper on the subject, drawing together the commission's findings with those of a separate review by the Law Commission.
Specifically, the Commission is tasked with investigating and reccommending on the best way to meet care and support costs between individuals and the state; how individuals can protect assets against the cost of care and the issue of public funding for the care and support system.
In a statement, Andrew Dilnot, commission chairman, said:
"How we best look after those who need care and support is one of the most pressing social policy challenges facing our society today. There are not going to be any easy answers, and I know difficult decisions will have to be made.
"This has been a hotly debated topic over recent months. It is now my job to consider the best way forward and offer concrete recommendations to Government."
Commenting, Nick Starling the ABI's director of general insurance and health, said:"With an ever ageing population this is only a problem that is set to become more acute and with even greater strains on public finances we clearly need new solutions with no further delays.
"The insurance sector has a key role to play in the funding of long-term care and UK insurers stand ready to play their part in tackling this fundamental issue for the future of the country."
