Emergency hospital admissions for people with conditions such as Parkinson's and multiple sclerosis have risen by almost a third despite a huge financial investment in services.
A National Audit Office (NAO) study found important indicators of care for people with neurological conditions have "worsened", and the Department of Health is unable to say whether extra spending has been effective.
There has been a 38% real-terms increase in spending on neurological services between 2006/07 (£2.1 billion) and 2009/10 (£2.9 billion). The extra money was never ring-fenced in local health budgets. Another £2.4 billion is estimated to be spent on social services for people with neurological conditions every year.
The report said that while access to services has improved and waiting times have fallen, key areas of care have got worse. There was a 32% increase in emergency neurological admissions to hospital between 2004/05 and 2009/10, compared to 17% for the NHS as a whole.
In 2009/10, 14% of people with Parkinson's disease, multiple sclerosis and motor neurone disease who were discharged from hospital after an overnight stay were readmitted within 28 days as an emergency.
Overall, the number of patients admitted to hospital over five years has also risen 31%, compared to 20% for the NHS as a whole.
The report said that those admitted as an emergency are often treated by doctors and nurses with no neurological training, with evidence suggesting this worsens outcomes for patients. Even at the point of diagnosis, some patients have good experiences but other have long periods between when they first have symptoms and final diagnosis.
Steve Ford, chief executive of Parkinson's UK, said: "The National Audit Office report exposes a wasteful failure to provide vital care for people with neurological conditions. Being admitted into hospital unnecessarily can cause problems for people with Parkinson's because they often do not get their medication on time. Late or missed medication can make their symptoms unmanageable so they have to stay in hospital longer and sometimes they may never recover."
Care services minister Paul Burstow said it was clear too many people were not getting personalised support to suit their needs.
He added: "We are determined to give people with long-term health conditions more control over their care and support. That is why we are developing a new outcomes strategy, piloting personal health budgets and rolling out telehealth to deliver better results for people and make sound use of NHS resources."