Ministers have ordered a review into the controversial use of anti-psychotic drugs to treat dementia patients.
The practice is widespread, even though there is evidence that the drugs have no positive impact, and may actually have a negative effect.
The announcement is part of a proposed new strategy to improve dementia care across England.
An estimated 570,000 people have dementia in England, and the figure is expected to double in 30 years.
Ministers have also given a firm commitment to a summit to draw up plans for new research into the condition.
Dementia experts wrote to Health Secretary Alan Johnson this week warning the predicted rise in cases over the next two decades could destroy the NHS.
They warned that an ageing population means the burden of dementia on the UK will double to £35bn a year within 20 years.
The rest of the proposed new strategy will be put out to public consultation over the next three months.
Ministers say it is designed to increase awareness of dementia, remove the stigma associated with it, improve diagnosis and boost the quality of care.
Among the proposals are plans to set up more memory clinics, where patients can get information about their condition and learn techniques for improving their memory.
It is also proposed that every patient with dementia is given a named "dementia care advisor" to be their single contact throughout diagnosis and treatment.
And all care homes and acute hospitals would be encouraged to have a key staff member identified as responsible for handling dementia patients, seen as a way to help care homes shift the focus from drug treatments to talking therapies.
Ivan Lewis, the health minister, said: "Dementia is a condition affecting an increasing number of families in our society and one of the greatest challenges now facing NHS and social care services.
"That is why this first ever national dementia strategy is so important.
"It will set out how we will improve the quality of life for people with dementia and their families, improve the quality of care dementia sufferers receive, increase awareness of the condition and ensure earlier diagnosis and intervention."
Neil Hunt, chief executive of the Alzheimer's Society, said: "Today is a landmark day for people with dementia and their carers, as the government recognises dementia as a national priority.
"Dementia is a devastating condition caused by diseases of the brain, yet only a third of people ever receive a diagnosis and families are often left to cope alone until they reach crisis point.
"It's time to drag dementia care out of the dark ages and change the way we treat some of our most vulnerable older people."
Mr Hunt added: "The review of anti-psychotic drugs to stop dangerous over-prescription to people with dementia is urgently needed."
The final strategy will be published in the autumn.
In Scotland it is planned to introduce targets to improve early diagnosis of dementia.