The UK lags behind other European countries when it comes to early diagnosis and giving patients effective drugs, it said.

The National Audit Office (NAO) study called on the Government to show leadership and accused the Department of Health of failing to make dementia a priority.

Around 560,000 people in England are estimated to have dementia but, as the population ages, that figure is expected to rise to 750,000 by 2020.

The report comes as High Court judges consider a challenge by drugs companies, backed by the Alzheimer's Society, regarding the health watchdog's decision on the funding of medicines for early stage dementia.

The National Institute for Health and Clinical Excellence (Nice) has said the drugs Aricept (donepezil), Exelon (rivastigmine) and Reminyl (galantamine) are not cost effective for patients in the early stages of the disease.

Another drug, Ebixa (memantine), which is licensed for use in the later stages of the disease, should not be recommended for anyone, it said.

Judgment in the case has been reserved, with a ruling expected by early August.