A quarter of Britain's over-fifties drastically underestimate how much it would cost them to spend time in a nursing home.

And with more older people being denied state help for long-term care every year, they may be in for a nasty surprise.

One-in-four individuals believe that the £25,000 cost of a year's fees at prestigious British school, Eton, is more expensive than one year in a UK nursing home. They are wrong, says new research from Saga Personal Finance - long-term care in this country can cost as much as £75,000 per year, with the average cost being £32,000.

"We often find that people don't think about funding long-term care until the last minute, when they are faced with a relative who needs immediate care," says Owain Wright, head of care funding services for Saga. "As this research shows, the cost then comes as a shock."

The Commission for Social Care Inspection (CSCI) says that recent projections show a rise of 53 per cent in the number of older people who will need care over the next 20 years. And as councils tighten local rules about who qualifies for state-funded care, many older people or family members will find themselves struggling to meet these substantial costs.

"As councils face an increase in the number of older and disabled people and in the costs of care, many have responded by raising the threshold people have to pass before they are entitled to a council-funded service," says CSCI chairman Denise Platt. "As a result, irrespective of the quality of social care services, fewer people are receiving services."

In response to the current crisis, an urgent debate was launched last month on the future of long-term care by a group of 15 organisations. Caring Choices, which includes Help the Aged, Age Concern, Joseph Rowntree Foundation and the King's Fund, will look at the failings of the current system and examine solutions.

Caring Choices says the UK's present system of long-term care is unsustainable and, without changes, older people will have to pay ever more out of their own pockets, including those on very modest incomes.

"A fairer, more rational system must be built on the foundation of a basic entitlement for everyone, calculated to reflect the level of care required rather than the financial means of the individual," says Sir Derek Wanless, senior associate of the King's Fund. "The system survives only because of the huge contribution made through informal care by families and friends."

There is some confusion over National Health Service contri-butions to long-term care. Councils are tightening up their criteria, but if you are receiving care in a nursing home you are probably entitled to the nursing contribution of between £2,000 and £6,000. For those with complex and unsta-ble medical conditions you may qualify to have all the costs of your stay in a nursing home met by the NHS. If you are self-funding, you could receive a tax-free attendance allowance for daily care which is non-means-tested.

If you are still not sure what you or a relative is entitled to, you can ask your local health authority for details. Also, an independent specialist adviser will be able to go through all your options - what state benefits you are entitled to, and any care fee payment plans that may help you if you are self funding.

If you do seek the help of a specialist adviser, make sure they have passed the relevant ex-amination and attained the CF8 qualification - this ensures they understand how the com-plexities of long-term care rules, regulations and state benefits fit in with general financial advice.