When the first Scottish Executive set out its plans for the introduction of free personal care for the elderly in September 2001, the then First Minister, Henry McLeish, could not have been more unequivocal. "In implementing this radical policy, we are delivering for the ordinary people of Scotland, no ifs or buts or maybes, full implementation and fully funded," Mr McLeish declared.

Nearly six years on, however, a report published today on behalf of the Joseph Rowntree Foundation reveals a hopeless lack of planning which has led to under-funding and a postcode lottery of services.

"Prior to the introduction of free personal care, no attempt was made to accurately cost personal care," says the report, conducted by Professor David Bell, Alison Bowes and Alison Dawson of Stirling University.

The problems are thrown into sharp focus by the fact that in 2004-05, Argyll and Bute Council was spending £8000 a year on each of its free personal care clients, while neighbouring North Ayrshire spent £1500.

The report says: "It is difficult to envisage what circumstances would lead to such huge differences in costs between local authorities carrying out the same legal duty across a range of clients who do not differ substantively in their needs or condition."

The report also reveals complaints about under-funding were "widespread" among local authorities, with many forced to dip into other budgets.

Some councils have also had to set up so-called "priority registers", which have led to some pensioners waiting weeks to receive payments.

The report states: "The financing of free personal care at the local authority level needs to be reviewed. Many of the difficulties in implementing the policy of free personal care are linked with issues concerning local authority finance.

"Our findings suggested significant discrepancies in the ability of local authorities to deliver free personal care in that, for some, it had proved manageable, whereas others had generated significant deficits and had had to cross-subsidise care for older people from other budgets."

Free personal care "can be successfully implemented", the report insists, but only if proper funding mechanisms are in place.

At least part of the problem identified in the report can be explained by the huge growth in demand for free personal care, putting pressure on finite resources. The report found a 62% increase in provision of care at home in the first three years of the policy.

Public support for the policy also remains strong, despite its well-documented problems. Some 59% of Scots continue to believe that personal care bills should be paid for by the executive, while 68% of the population say they would pay an extra penny in the pound in income tax to fund it.

The report concludes: "Overall, we note continued levels of satisfaction from older people and their carers who access free personal care - although local authority delays in assessment and confusion over meal preparation continue to be problematic."

The new executive has already announced that Lord Sutherland, the architect of the policy, is to head up another review of how it is working and Professor Bell last night set out what he hoped would come out of it.

He said: "Firstly, there needs to be transparency about entitlements, with local authorities being clear on how they fulfil their responsibilities. Secondly, the funding of the policy needs to be adequate to prevent any rationing or reduction of services offered."

Under the policy, care home residents who are eligible for payments receive £145 towards their personal care and £65 a week for nursing care. Those who receive care at home also receive payments, but the amounts are not specified. Nicola Sturgeon, the Health Secretary, has announced that those payments are to go up in line with inflation.

Henry McLeish drove through the policy despite opposition from Labour politicians on his own back benches, who questioned whether the universal benefit was affordable in the long run.

His Westminster colleagues expressed similar concerns, not least because they had already ruled out its introduction south of the border and recognised that the executive's decision would lead to calls for them to change their mind.

Last week, official figures revealed that the costs of implementing free personal care had increased by 60% since it was introduced, while the number of over-65s benefiting from the policy had broken the 50,000 barrier for the first time.

The executive remains as committed as ever, however. A spokeswoman said: "The key findings (of the report) largely confirm the picture painted by other recent reports.

"The various actions we have set in hand are intended to address those issues and improve delivery of free personal care."

A spokesman for Help the Aged Scotland said the Joseph Rowntree Foundation's report showed that "higher costs don't necessarily guarantee better services".

He added: "The fact that there's such a range of figures being spent across the country needs to be looked at. We need to ensure resources are being used effectively."

The spokesman also suggested that a regulatory body be established to oversee the costs and implementation of the policy.

It is not the first time Argyll and Bute's implementation of free personal care has come under the microscope. The authority went to court this year to challenge a ruling by the public services ombudsman that its operation of a priority register was unlawful. A legal ruling is expected soon.

A spokeswoman for Argyll and Bute Council last night said they were pleased the report had highlighted the problems associated with the policy. She added: "Argyll and Bute Council has allocated additional revenue to assist in managing the priority list for services while working closely with the Scottish Executive's joint improvement team during the last two years.

"We have also participated in a recent peer group review, organised by the Scottish Executive, in order to improve our performance and cost effectiveness in service delivery."

Bernadette Docherty, the corporate director of social services at North Ayrshire Council, said: "We implement fully the Scottish Executive guidelines on free personal care, including the rates of payment."