Ministers said that 20 Whitehall departments and agencies would work together to ensure that people who suffered mental ill health enjoyed the same chance as anyone else of finding a job, getting education and training, and playing a full part in society.

The National Institute for Mental Health in England (NIMHE) will spearhead a five-year plan to tackle stigma to be launched next week. It will include teaching schoolchildren about mental illness to improve public understanding, and action by the media regulator, Ofcom, against inaccurate portrayals of mental health issues.

The announcement came as the government's social exclusion unit (SEU) published a report that showed those with mental health problems faced great hardship and prejudice, including debt, unemployment and early death.

The report, Mental Health and Social Exclusion, found that only 21% of people with long-term mental illness were employed - the lowest of any disabled group. More than a million who wanted to work were jobless and the cost to the economy of missed employment opportunities was £23bn a year. But less than four in 10 employers said they would recruit someone with mental health problems.

The minister for social exclusion, Jeff Rooker, said that no job should be off limits for people with mental health problems.

"If you don't make work available you're wasting a human and an economic asset. There should be no no-go areas of employment," he said at the launch of the SEU report at the headquarters of communications company BT in London.

"Many people with mental health problems do want to work, yet fewer than a quarter actually do."

Mental health minister, Rosie Winterton, admitted that part of the reason for high unemployment among those with mental health problems had been that healthcare staff did not regard helping them into work as a priority.

But under the government's new strategy, everyone with severe mental health problems will have an employment adviser to reduce the high level of joblessness.

Employment support programmes have not been widely implemented in the UK, but in the US have a 50% success rate in getting people with mental health problems into work.

Dr Paul Litchfield, the chief medical officer at BT, said mental illness was the single most important health issue for British industry, costing his company £30m a year through sick pay, support and cover for absent staff.

But he said this cost had been significantly reduced over the last three years under a joint scheme with trade unions to better support staff. "We hope that as an employer it will enable us to recruit and retain talented individuals who happen to have a mental health problem," added Dr Litchfield.

Dr Andrew McCulloch, chief executive of the Mental Health Foundation, welcomed the report as a significant move towards "tackling the raft of social problems and barriers which cause and exacerbate mental ill health".

But Marjorie Wallace, chief executive of mental health charity Sane, cast doubt on the impact of the government's new strategy when it was only funded with £2.7m.

Even if ministers fulfil their pledge to introduce a revised draft mental health bill before the Queen's speech in November, there is not enough time to bring forward a complete bill before the expected general election next year, according to mental health charities and professional bodies.

The mental health minister, Rosie Winterton, said yesterday: "What we're going to do is bring forward a revised mental health bill for pre-legislative scrutiny before the end of this parliament." This parliamentary sessions concludes on July 22. She added that scrutiny would be carried out by an expert parliamentary committee.

A spokesman for the Sainsbury Centre for Mental Health said because such scrutiny usually lasted 13 weeks the bill was expected to be shelved until after an election. He said: "When you take into account the summer recess and party conferences I don't see how there will be enough time."

Some policy advisers suspect that ministers will use the election to conveniently drop the proposed legislation, which has faced opposition from more than 60 mental health bodies since it was first published two years ago.

Michael Howlett, director of the Zito Trust, which campaigns for reform of mental health policy, said he doubted that the government would ever implement a new mental health act.

"I'm a little bit sceptical in terms of whether we're going to see a new mental health act. I think we will see a new bill, or a new draft bill, in September. But I just don't see how they're going to fit it in to the parliamentary timetable if there's a general election in May.

"If it becomes an act, the code of practice still has to be published and that will take some time. So we're talking years here before it's implemented."

Doubts over the government's commitment to re-introducing its draft mental health bill were sparked last month when the first minister for Wales, Rhodri Morgan, told the Welsh Assembly: "We do not expect the draft, pre-legislative bill to come forward this side of a general election."

Despite reassurances from the Department of Health (DoH) that a revised draft bill would be published in the next few months, a spokeswoman for the Mental Health Alliance, a coalition of 60 professional bodies and charities opposed to the proposed legislation, said: "We haven't a clue what's going on. We keep hearing rumours that it will be next week, although July has cropped up as a possible publication date."

Even if a revised bill is published before the Queen's Speech, ministers face a struggle to push forward the reforms because they appear unwilling to drop controversial proposals to indefinitely detain people with personality disorders and extend compulsory treatment to people with mental health problems living in the community.

Ian Johnston, president of the British Association of Social Workers (BASW), said this was evident at a meeting last month organised by the DoH and the Home Office, the two departments responsible for the bill.

He said the mental health tsar, Louis Appleby, was quite hostile "towards anyone who asked questions about whether changes were being made to the draft bill".

Mr Johnston said the government presented some new draft clauses concerning the controversial aspects of the draft bill. These included guidelines on the use of compulsory treatment, which stressed that it should only be used when treatment could not be given in any other way.

But he added: "It then goes on to have a condition that this does not apply to a person over 16 who is deemed to pose a serious risk of harm to others. I would disagree with that. It seems to me that even in those cases treatment should be on a voluntary basis wherever possible."