Ministers have warned a "radical rethink" is needed over the strained care and support system as people live longer.

A compulsory savings scheme or requiring people to take out insurance for care and support are among the possibilities being floated as the Government launches a six-month consultation on the issue, calling for an "open and honest" debate about how much Government, individuals and families should pay.

Gordon Brown said it was "essential" that those people who worked hard and saved for their retirement were treated fairly in the provision of social care – ranging from home helps and meals on wheels to round-the-clock care for those more ill – but he warned there was "no easy solution". Many require care packages costing tens of thousands of pounds a year.

He admitted organised care services were often "bureaucratic and inflexible" and acknowledged many families worry about having to sell a "treasured" home to pay for their care" an issue Tory leader David Cameron also pledged to tackle when he met Yorkshire Post readers last month. At the moment, anyone with assets of more than £22,250 has to pay in full for a residential home place.

The consultation launched yesterday comes amid growing concern over the affordability of the care system, with pressures exacerbated by increased life expectancy, healthcare and technology improvements, and people increasingly wanting to stay in their own home, which makes providing care more expensive.

The Government expects 1.7 million more people will need care and support in 20 years, with a £6bn shortfall in funding anticipated. In Scotland, personal care is free, but in England and Wales it is means tested.

Ministers say a reformed system should focus on helping people stay independent, target funding at the most needy and ensure everyone receives the high-quality care and support they need.

But while pledging "the Government will not shirk its financial responsibilities" they say taxes "can only go so far" and say the principle of sharing costs between the family, individual and Government is right.

"If we fail to get to grips with these long-term issues we will fail to provide quality of life for potentially large groups of people, and consequently demand for NHS services will increase inappropriately," says the consultation paper

Another issue under discussion includes means testing, which Ministers acknowledge "can be perceived as penalising people who have worked hard and made sensible decisions at earlier points in their life".

Health Secretary Alan Johnson said: "Radical change is needed to bring together the range of activities, services and relationship that underpin care and support so that people are clear about what they are entitled to and how and where they can get it."

But Liberal Democrat leader Nick Clegg described the treatment of older people as "a stain on the moral conscience of society" and accused the Government of "11 years of delay and dither" over the looming crisis.

Shadow Health Secretary Andrew Lansley said: "Everyone agrees people shouldn't have to sell their home to pay for long-term care. The Government needs to look at partnership models like the one we proposed at the last election so that the costs of care are shared between the state and families in a fairer way."

The chairman of the Local Government Association Community Wellbeing Board, David Rogers, said there was a funding "black hole" because the Government's financial support for councils had not kept pace with an ageing population. The King's Fund agreed radical solutions were needed to reform a "complex, unfair and unsustainable" system.