The government will work with the aged-care sector to establish the scope of a royal commission ordered by the prime minister.
Scott Morrison announced the royal commission on Sunday following appalling cases of abuse of elderly people.
The prime minister said when Australians make the challenging decisions of how their loved ones will be looked after, they need to have confidence in the nation's aged-care system.
"That would have to be one of the toughest decisions you make. They are relying on you, 100 per cent, in their time of greatest vulnerability," he told reporters in Canberra on Sunday.
The inquiry comes after audits at some facilities revealed a "disturbing trend" of non-compliance and abuses in the sector, he said.
There was a 177 per cent increase in the number of aged-care homes where a serious risk to residents was identified in the past financial year.
There was also a 292 per cent increase in the number of facilities that refused to comply with rules.
The royal commission will look at the quality of both residential and home aged care, including how young Australians with disabilities are cared for in residential facilities.
Mr Morrison said the government will take a few weeks to settle its terms of reference, in collaboration with the aged-care sector.
A number of aged-care groups have welcomed the royal commission.
Sean Rooney is the CEO of Leading Age Services Australia, the national peak body supporting providers of age services.
Mr Rooney says the royal commission will ensure Australia has a better-aged care sector in the future.
"One-point-three million older Australians access care and services across the age care system every year," he said.
"This is a good thing. This is a sign of success of our society. But with that, comes increased focus and scrutiny on how the aged care system and the wider community embraces those older Australians.
"Having this national focus on aged care is absolutely appropriate and essential if we are going to make the system better."
The royal commission will also cover young people with disabilities living in aged care homes.
But disability advocates say they would like to see the inquiry extended to cover all Australians living with a disability.
Greens disability rights spokesperson, Senator Jordon Steele-John, says any inquiry must cover both the aged and disability care sectors.
"These are sectors which are utilised by the same cohort of people with, the same needs and same vulnerabilities due to to the way society treats these two groups of people. And so these two things need to be considered together," he said.
But some have said they don't want it to slow down urgent reforms, which have been recommended by a range of previous inquiries.
"We must press on with addressing key workforce and funding issues, and not lose sight of making the system better right now," Mr Rooney added.
Mr Morrison said the government would not pause important work in the sector already under way.
