The government is set to announce new funding for dementia care and diagnosis as part of an overhaul of the aged-care sector.

Prime Minister Julia Gillard is set to unveil measures for aged care including a shift in focus from aged homes to in-home care.

The plan will also reduce pressure on the elderly to sell their homes and wealthy Australians will be required to chip in more for the cost of their care.

But the strategy is likely to ignore key parts of a Productivity Commission report released in August 2011, including a five-year reform timetable and a $60,000 cap on out-of-pocket care costs, government sources say.

The cash for dementia falls well short of the plea from Alzheimer's Australia for $500 million.

The government will spend $268.4 million over five years on dementia, including $164.3 million to be paid as supplements to sufferers in aged-care facilities and at home, Fairfax reports.

The remainder will promote early diagnosis over the disease.

Ms Gillard and Aged Care Minister Mark Butler will address the media on Friday morning.

Opposition Leader Tony Abbott said the government would be making the elderly pay more for aged care.

He told the Nine Network the prime minister was announcing 'big new additional charges' for people going into aged-care facilities.

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Govt to boost funds for dementia care