Like most western countries, the UK has an ageing population
A fifth of social care places purchased by councils in England were in adult care homes rated "poor" or only "adequate", a watchdog has found.
Overall, the Commission for Social Care Inspection said council provision was improving, but there was still "a long way to go" to transform the system.
It said plans to allow people greater control were happening too slowly.
Ministers said although social care was "better now than it has ever been" they wanted to press on with improvements.
Help the Aged said there were "fundamental failures" in the system.
"This report shows that the government's aspirations of putting people first are far from a reality, said the charity's director of policy Paul Cann.
The CSCI oversees 18,500 adult care homes in England, as well as other support services such as meals-on-wheels.
In 2007, councils purchased just over half of all registered places in care homes in England - some 36,500. The rest were provided by people paying for their own care.
Looking specifically at homes for the elderly, the CSCI found that 22% of places purchased by councils were in facilities rated poor or adequate.
It also noted a sharp rise in the number of job vacancies in the social care sector. In the first six months of 2008, Job Centres recorded 121,180 vacancies, compared with 79,406 in the first six months of 2004.
Care Services Minister Phil Hope said more people were being helped to live independently in their own homes, and were "in control of their own services" than before.
He added that the quality of residential care had also improved, with 87% of councils rated with either two or the full three stars. And he said there were now nearly 5,000 dignity champions around the country - part of a campaign to encourage more respect for older people in care.
"However I want us to press forwards with further improvements," he said.
"We are investing over £500m to tailor more services to individual needs. We will help councils spread best practice quickly so that more can share the benefits of personalising services."
Diana Lewin, from Shropshire, told the BBC about her struggle to find a home for her husband Paul who suffers from Parkinson's. She moved him six times in seven years because she was unhappy with his care.
"I've felt very drained," she said. "I've felt I couldn't get on with my own life because I was just so worried about him.
"He'd be saying to me, 'Get me out of here,' but he wouldn't say it to anybody else. They'd say, 'Oh, he's completely happy here.'
"A lot of care staff can't see me as Paul's wife, who cares about him - they just see me as somebody who complains."
Help the Aged said the "systemic failures" needed to be addressed.
"Despite some overall improvements, this report shows there are still far too many older people forced to endure second-rate care at the hands of our failing social care system," Mr Cann said.
"The general failure of the system is also reflected in the large number of staff vacancies - care isn't being valued and until it is, more and more older people will continue to miss out on support."
The CSCI also looked at how much had been done to introduce personalised care - allowing individuals to choose the care they want.
The watchdog's conclusion was that progress was "patchy" - 21% of councils were judged to be excellent, but 23% only "adequate".
Diana Lewin moved her husband to six different care homes in seven years
Dame Denise Platt, chairman of the CSCI, said: "People who need social care should be seen as individuals, first and foremost.
"The support they receive should be tailor-made, allowing people to live their lives as they choose.
"The government's ambition to transform care services is to be commended. However, there is still a long way to go to turn policy into practice."
Imelda Redmond, chief executive of Carers UK, said families needed help to navigate the system.
"We are beginning to see that in the tight financial situation, local authorities are cutting their budgets and expecting more from families. However, a short-sighted approach that leaves carers suffering ill health and forcing them to give up work, is not only unfair, but is bad for the economic future of the country."
Last June, coroner for the Isle of Wight John Matthews said the CSCI was "worse than useless," branding it "a watchdog without any teeth or even a will to act".
From April, the CSCI, along with the Healthcare Commission and the Mental Health Act Commission, will be replaced by a single, integrated regulator, the Care Quality Commission.