A new report has called for more funding to be allocated to dementia research following the revelation that the condition costs the country £23bn per year.

Dementia is more costly than cancer and heart disease combined but only receives a fraction of the funding, according to the report by the Alzheimer's Research Trust (ART) and Oxford University.

ART predicts that by 2025, there will be more than one million people with the condition in the UK. Presently, the number stands at 822,000 – 17% higher than previously estimated.

Despite the rising number of cases, for every pound spent on dementia studies, £12 is spent on investigating cancer and £3 on heart disease.

However, the report shows that cancer care costs the country £12bn per year and heart disease £8bn – both far less that the £23bn annual cost of dementia.

The £23bn is made up of £9bn in social care costs, £12bn in unpaid care and £1.2bn in healthcare costs.

Rebecca Wood, Chief Executive of the ART, believes that research into the condition – which she calls the "greatest medical challenge of the 21st century" – needs to be better funded.

She said: "The true impact of dementia has been ignored for too long. The UK's dementia crisis is worse than we feared. If we spend a more proportionate sum on dementia research, we could unleash the full potential of our scientists in their race for a cure.

"Spending millions now really can save us crippling multibillion-pound care bills later."

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Alzheimer's Research Trust