Dementia must be viewed as an urgent priority after years of woeful neglect by the NHS, says the House of Commons Public Accounts Committee (PAC).
One in three of us will die with dementia if we make it past 65
The disease deserves the same attention accorded to cancer and heart disease, given that so many of us are now set to develop the condition, the MPs said.
They compared it to cancer in the 1950s, when fear and mystery surrounded a disease seen as untreatable.
Just over 500,000 people in England suffer from dementia.
The report from the cross-party committee, which scrutinises public spending , follows one from the National Audit Office which said England lagged behind Europe when it came to diagnosis and access to drugs.
The panel, which is led by a Tory MP, says the Department of Health has not given the disease the attention it deserves and so the NHS has failed to deliver on both fronts.
"Such is the fear of the condition, the belief among both public and professionals that little can be done to help sufferers, and the lack of knowledge of many GPs, that dementia is never formally diagnosed in up to two-thirds of cases," said chairman Edward Leigh.
"Many sufferers are also not being diagnosed early enough and, when diagnosed, end up in hospital beds or care homes, deprived of the specialist care they need."
The committee examined the prevalence and costs of dementia, diagnosis and early intervention, access to and quality of support services, and experiences of people with the condition in hospital and care homes.
The brain disease affects over 560,000 people in England - at a cost of around £14bn a year - but that figure is set to soar as the number of cases rises by over 30% in the next 15 years.
The burden of care, the committee concluded, most often fell on family members who did not receive adequate levels of support from the system.
While they may in principle save the taxpayer £5bn a year by looking after the patient at home, this was ultimately a false economy.
A lack of respite or domiciliary support frequently means dementia patients ended up requiring costly care in hospital or homes much earlier than might be the case if carers were properly supported, the committee found.
"It is essential that local health organisations and social care providers take action now to assess carers' needs and work towards meeting them," said Mr Leigh.
There also needed to be much greater awareness among healthcare professionals of the treatment options available, and greater sensitivity in conveying diagnosis, the report said.
It stressed diagnosis should be made even when the options were limited because it allowed sufferers and their families to make plans.
"The public accounts committee is right: dementia needs to be given the same priority as heart disease and cancer in the NHS," said Neil Hunt, of the Alzheimer's Society.
"We need public awareness campaigns; dementia training for all health and social care staff and services that can diagnose people early.
"The human and economic cost of dementia can't be ignored - if we live to 65, one in three of us will die with dementia."
Health minister Ivan Lewis said he had long acknowledged that "too many people are let down by existing services".
"I am determined to transform the support available to families affected by this harrowing illness.
"We welcome the PAC report and will consider the recommendations in the context of the work taking place on the strategy."