More than 1,400 people with dementia who are well enough to go home will be stranded in hospital on Christmas Day, the Alzheimer's Society said.
Charity bosses blamed a lack of social care funding for "turning wards into waiting rooms" as their investigation revealed dementia patients were delayed up to 10 times as long as those without the condition.
As there is no cure for dementia or drugs to slow its progression, social care rather than the NHS is what the hundreds of thousands of people in the UK rely on every day.
But the Alzheimer's Society said a £2bn shortfall in social care funding meant there was not enough support for people with dementia.
The charity studied hospital audits and found that people with dementia stayed an extra 500,000 days in hospital despite being well enough to leave, which costs the NHS more than £170m.
The society said this was a conservative estimate as only two out of three people with dementia have been diagnosed.
Longer than necessary stays in hospital can have severe consequences for patients, as they may become too frail to be discharged home.
Hospitals can also be upsetting and confusing environments for those with dementia.
Jeremy Hughes, Chief Executive of the Alzheimer's Society, said: "With such scarce social care funding, wards are being turned into waiting rooms, and safety is being jeopardised.
"From the woman who spent two months on a bed in a corridor because there were no available care home places, to the man who died after months of waiting left him debilitated by hospital-acquired infections, people with dementia are repeatedly falling victim to a system that cannot meet their needs.
"One million people will have dementia by 2021, yet local authorities' social care budgets are woefully inadequate, and no new money has been promised in the budget to cope with increasing demand."
He demanded more money for social care to reduce the pressure on hospitals.
Karen Moore, whose father had dementia and was stranded in hospital for six months, said: "Mum died of cancer while Dad was stuck in hospital, so I was grieving while also trying to sort out Dad's care.
"It was a nightmare. The hospital was great, but it wasn't the right environment for Dad and we were under pressure to free-up a bed.
"But because his needs fluctuated so much it was impossible to get him sorted with social care, so he was stuck in hospital for six months.
"Dad got infection after infection; it was like he was being taken down by a pack of wolves. Eventually, he died on the ward."
The Local Government Association said the findings reinforced its call for more funds for adult social care.
The Department of Health said the survey was small and did not represent the real situation.
A spokeswoman added: "No one should be stuck in hospital when their treatment has finished, that's why we've given an extra £2 billion funding for social care over the next three years and next summer we will publish plans to reform social care to ensure it is sustainable for the future."
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