A new report has found aged care in Australia is in crisis and will be unable to meet future demands.

The Access Economics report found the system is plagued by staffing and bed shortages and is crumbling under financial pressures.

National Seniors chief executive Michael O'Neill says major changes are needed if the ageing population is to be cared for adequately.

He says the current system is not coping.

"The funding model is not working at the moment. Financial pressures affect the staffing levels that are able to be provided - both the quality and quantity - and pressures on staffing inevitably affect the level and quality of care," he said.

"Unless we get on top of the financial outlook we're not going to be able to deal with those core issues of care and quality of caring and staffing."

Mr O'Neill says there has been a decade of inaction on aged care.

"It hasn't arisen overnight this problem. It's been there and governments have tended to push it away and ignore it, hoping it will go away and instead we've now got a situation where we've got a system that's unsustainable," he said.

"What is required is some leadership by government to ensure that a system is established that can provide aged care for a nation with a very substantial ageing population coming through."

Access Economics has suggested four alternative funding models for supporting aged care, including 'healthy ageing saving accounts' and 'long-term care insurance'.

Mr O'Neill says the Government now needs to lead a debate on what model will be sustainable into the future.

"We're looking for the new minister to take a strong lead in this issue and to provide some direction for the sector," he said.

"For the Government to increase the priority that it attaches to aged care and recognising the importance of the long-term - if we don't get it right now, then that baby boomer bubble that's coming forward into aged care will provide enormous problems in the future."

Source: ABC News