Inspectors found that nearly half of the people in residential care lived in homes which failed to meet minimum care standards - in some cases medicines were even given to the wrong people.
Employers have also admitted that staff working in care homes have literacy and numeracy problems, and employees are increasingly drawn from overseas.
The Commission for Social Care Inspection found that drugs were being handled by unqualified staff and that homes were not storing medicines or recording their use properly.
The report said where there were high training standards, homes complied with regulations on dispensing medication. However, Skills for Care, the employer-led sector skills council for adult social care, has warned that colleges and training providers may not be able to cope with thousands of extra staff who need qualifications in handling medication.
Richard Banks, head of workforce development at Skills for Care, said: "In some areas there are difficulties. The social care sector is making much bigger demands on training than it has done before."
He added that training alone was not the answer, as many care homes needed to improve their systems for handling drugs, but admitted that the skills of the workforce are a serious concern.
"One of the things that's really important about being in a care home is that you have confidence that the pills people are giving you with your breakfast are the right ones at the right time," he said.
"It is shocking. I'm not making any excuses for it."
Mr Banks said that the social care sector was undergoing a process of professionalisation, which began in 2000 with the start of care homes inspections.
But he admitted progress has been slow - a target for half of all care home workers to have appropriate qualifications is expected to be missed.
Last week ministers pressed ahead with the announcement that the 750,000-strong workforce would have to join a professional register for the first time.
"Part of the staffing problem is that a lot of these people we are talking about are on the minimum wage. These people are right down at the bottom of it," Mr Banks said.
"There are a large number of people coming from outside countries. The only people they can often get are people who have recently arrived in this country from eastern Europe. There are issues around basic skills."
The Association of Learning Providers said that some training companies which are currently under-used could help meet demand.
Jo North, chair of the ALP's care group, said: "I understand totally what Skills for Care is saying on the capacity issue. But I think there are some solutions."
She said computer simulations could also now be used to train students to administer drugs correctly.
Basic skills were already being integrated into many national vocational qualification courses and apprenticeships in social care, she said.