Elderly patients are suffering a "diminished quality of life" because social care funding pressures mean services are being reduced, a powerful committee warned today.

MPs also claimed cuts in support are driving increased demands on the NHS as they called for an overhaul of the way the system is run.

In a report today, they recommended that elderly care, health and housing services are joined up to stop patients being "passed like a parcel" from one department to another.

Stephen Dorrell, chairman of the health select committee, said: "This government, like its predecessors going back to the 1960s, has stressed the importance it attaches to joined-up services.

"Growing demand, coupled with an unprecedented efficiency challenge, makes it more urgent than ever before to convert these fine words into fine deeds.

"We look to the Government to set out in its Social Care White Paper how this vital objective will be met."

The health committee suggests that failure to link up commissioning and provision across the services leads to more hospital admissions, later discharge and poorer outcomes.

But the consequences for providers are "no less stark" as the NHS will fail to meet its efficiency saving targets of 4% every year over the next four years, it added.

NHS chief executive Sir David Nicholson told the committee that salami-slicing budgets instead of integrating services would have "very serious consequences".

MPs welcomed the government's commitment of an extra £2 billion a year for social care by 2014/15 but warned "it is not sufficient to maintain adequate levels of service quality and efficiency".

They found "funding pressures" are causing reductions in service levels "which are leading to diminished quality of life for elderly people and increased demand for NHS services".

The cross-party committee also said the large bills pensioners are left with for services such as home help come as a "shock" to many.

It called on the government to accept the "principle" of a cap in costs following the recommendation last year by the Dilnot Commission for the state to step in when bills rise above £35,000 for any individual.

Dorrell added: "This report is the latest in a long line of reports which have stressed the importance of joined-up services.

"It is impossible to deliver either high quality or efficient services when the patient is passed like a parcel from one part of the system to another, without any serious attempt to look at their needs in the round.

"This obvious truth has often been repeated, but seldom acted upon.

"The funding for NHS care, social care and social housing comes from different sources.

"Our central recommendation is that the key to joined-up services is joined-up commissioning.

"We recommend that the government should place a duty on the new clinical commissioning groups and local councils to create a single commissioning process, with a single accounting officer, and a single outcomes framework for older people's health, care and housing services in their area."

Richard Humphries, senior fellow at the King's Fund health thinktank, said: "Successive governments have talked about the need to integrate health and social care but have failed to make it happen. The time for warm words and good intentions has passed - delivering integrated care must assume the same priority over the next decade as reducing waiting times was given over the last.

"The committee is right to stress that a more ambitious approach is needed to achieve this based on coordinated commissioning and pooled budgets. We think this could go a stage further by moving towards a single assessment of the funding needs of the NHS and social care in future spending reviews."

Care Services Minister Paul Burstow said: "Our ambition for the NHS and social care is a simple one - to achieve better results for people and carers.

"We know that urgent reform of the care and support system is needed.

"We will be responding to this report and the Dilnot Commission this spring, with full proposals for reform of adult social care in a White Paper and progress report on funding reform."

Sue Brown, head of public policy at the deafblind charity Sense, said: "The stories Sense hears from deafblind people, particularly around local authorities increasingly asking people to pay for services out of their own pockets or not receive any support, suggest that the committee is right when it says 'social care funding pressures are causing reductions in service levels which are causing diminished quality of life'.

"Whilst better integration of health and social care has the potential to improve the system for many people, it is essential that social care needs do not get subsumed into health care."

Dot Gibson, general secretary of the National Pensioners' Convention, said: "The problem with our social care system is that it is the Cinderella of the welfare state, experiencing years of under-funding, rationing and poor standards.

"Nearly one million older people are denied any assistance at all, many are still forced to sell their homes in order to pay for care, and the cost and quality of some treatment is shocking.

"The government's expected White Paper must seriously consider the creation of a National Care Service that can join up all the dots and offer a comprehensive system for looking after our most vulnerable pensioners."

Age UK director-general Michelle Mitchell said: "The government should act urgently on its findings and implement the Dilnot funding reforms, update social care law, and put in place the incentives the committee proposes to bring health and social care much closer together."

Jo Webber, NHS Confederation deputy policy director, said: "The committee is absolutely right that the health and social care system has to be better integrated. The starting point must be to find a long-term solution to social care funding as, without reform, the system is on the brink of collapse.

"We agree with the committee that it is unlikely the Health and Social Care Bill will genuinely encourage integration. While promotion of integration is written into the Bill, the creation of new bodies and the division of responsibilities for various services risks fragmenting care more rather than less."

Royal College of Nursing general secretary Peter Carter said: "Getting social care funding right is crucial not only for the future of the social care system but the NHS too.

"We urge the government to take on board the recommendations of the Dilnot report in the forthcoming White Paper and deliver a health and social care system that is fit for the future."

David Rogers, chairman of the Local Government Association's community wellbeing board, said: "This report highlights yet again the urgent need for the Government to come to grips with the rapidly growing demand for social care and the rising cost of delivering it. The system is already underfunded and problems are being compounded by severe cuts to council budgets."