The royal commission into aged care has found the country's aged care system is "sad and shocking" and "diminishes Australia as a nation," while calling for immediate action to support more older Australians to stay in their homes and reduce the use of chemical restraints in aged care.

In its interim report, the royal commission also said urgent work was needed to stop the flow of younger people with disability going into the aged care system, describing it as a human rights issue.

Minister for Aged Care Richard Colbeck said the royal commission report into aged care had put the government "on notice". Credit:Alex Ellinghausen

The report, titled Neglect and delivered on Thursday in three volumes, said a fundamental overhaul is needed of the aged care system and the way it is designed, funded and regulated.

It said there was "widespread over-prescribing, often without clear consent, of drugs which sedate residents, rendering them drowsy and unresponsive to visiting family".