There will be an overhaul of mental health legislation, plans for crisis intervention and more support for the most seriously ill, some of whom have slipped through the community care net.

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In a letter to Professor Graham Thornicroft, chair of the mental health reference group, the government's advisory body on mental health, Health Secretary Frank Dobson says: "Community care has failed.

"Discharging people from institutions has brought benefits to some. But it has left many vulnerable patients to try to cope on their own.

"Others have been left to become a danger to themselves and a nuisance to others. Too many confused and sick people have been left wandering the streets and sleeping rough.

"A small but significant minority have become a danger to the public as well as to themselves".

Third way

The government is proposing "a third way" for mental health. This involves:

• a 24-hour crisis helpine
• 24-hour crisis teams to respond to emergencies
• more acute mental health beds
• more hostels and support accommodation
• improved mental training for GPs and others in primary care
• extra counselling services in health centres
• clear guidance on the most effective drugs and therapies
• a new national framework for mental health
• specialist secure units in each NHS region
• assertive outreach teams to keep tabs on people discharged from hospital
• short-term accommodation in every region to provide round-the-clock nursing care and supervision
• changes in mental health legislation.

Mr Dobson also suggested that the government may bring in compliance and community treatment orders to make sure patients get supervised care if they do not take their medication or if their condition worsens. This could be incorporated in a thorough review of the Mental Health Act 1983 which Mr Dobson said was based on "the needs and therapies of a bygone age".

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There has been speculation that these could include plans to force patients to take their medication. There have been some notable cases where patients have committed violent acts, including murder, as a result of a failure to take their medication regularly on discharge from hospital.

To achieve these aims, the government is thought to be planning to invest up to £1bn in mental health care. However, it is not revealing details of any cash injections until the autumn - when its Green Paper on mental health is published.

Mr Dobson said any extra funds would be tied to strict targets on their clinical and cost effectiveness.

Serious problems

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Poor co-ordination between agencies, problems with housing, lack of resources and beds and shortages of staff have led to some community care tragedies, including killings, and to questions about whether the policy is the right way forward.

It involves the gradual shut-down of the old Victorian mental asylums, with patients deemed able given support to live in the community.

However, support has often been lacking or has been severely under-resourced.

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Official reports have shown that cases, such as that of Christopher Clunis, the care in the community patient who killed Jonathan Zito, are rare. But the media has seized on them to point out failings in the system.

Marjorie Wallace, chief executive of mental health charity SANE, said: "For the majority, community care has been a true liberation, but for many thousands of others it has meant fighting for their mental and physical survival alone in squalid flats, beds and breakfasts, hostels or with families who break under the strain."

She welcomed the government's proposals, but was keen that the changes should cover all people with mental illness and not just those with the most serious problems.

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The Mental Health Foundation (MHF) echoed her views.

"One in four people suffer from mental health problems every year. The government needs to look at the whole spectrum of services," said a spokeswoman for the MHF.

Recurring money

The Sainsbury Centre for Mental Health said it was in favour of increased investment in community care, but it is worried the money will only be a one-off.

"It will have to be recurring, if it is going to work," said senior policy advisor Dr Andrew McCulloch.

The British Medical Association also called for adequate resourcing of the system and mental health charity Mind demanded a "real money" investment.

Chief executive Judi Clements warned against a more coercive approach to mental health legislation.

"We have already voiced serious concerns over the introduction of compulsory treatment in the community, which will not only drive users away from services, but could also alienate professionals too, as services become less attractive and accessible for all concerned." she said.

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However, Jayne Zito, who is on the mental health reference group and set up the Zito Trust after the death of her husband Jonathan, said extra resources were not the only problem.

She believes health professionals have sometimes failed to detain people who are a risk to themselves and the community.