Campaigners say the overwhelming majority of mentally ill people pose no risk to public safety.
Most mentally ill people are not violent
Some critics have suggested the modern approach of treating mental illness in the community may have increased the risk of violent incidents.
But experts say there is little statistical evidence to back this up.
They say violent attacks by strangers are relatively rare, and it would be wrong to deprive many people of their liberty when they pose little threat.
There have been a number of high profile cases of mentally ill people turning into killers.
These include Christopher Clunis, a schizophrenic who killed Jonathan Zito on the platform of Finsbury Park tube station in north London in 1992.
Clunis had stopped taking his medication.
However, cases of this ilk are not common.
Andy Bell, director of communications at the Sainsbury Centre for Mental Health told the BBC News website that around 30-50 murders a year out of a total of 800 could be blamed on mental illness.
"That is still 30-50 too many, but it is a very low risk when you compare it to the number of violent incidents involving alcohol," he said.
Mr Bell said around 500,000 people in the UK were suffering from a severe mental illness such as schizophrenia or manic depression, which required specialist treatment. In total one in six people has some form of mental illness.
He said the idea that all mentally ill people posed a threat to society was a stereotype which was not founded in reality.
"The policy of care in the community has allowed hundreds of people to live peacefully and normally as valued members of the community," he said.
"We don't want to go back to a Victorian policy of locking up people away from the community on the grounds that one day maybe they might be a risk.
"It is very, very difficult to predict violence, and so such a policy would require locking away hundreds, maybe even thousands of people in order to prevent one or two tragic incidents."
Violence is not a common symptom of mental illness. Most schizophrenic individuals, for instance, are not violent; more typically, they prefer to withdraw and be left alone.
Mr Bell said statistics showed that a mentally ill person was twice as likely to be murdered as anybody else.
He said support services continued to be under-funded. Mental health as a whole received a third of the increase in resources granted to the rest of the NHS this year, he said.
Marjorie Wallace, chief executive of the mental health charity Sane, said every violent incident involving a mentally ill person would inevitably call into question the policy of care in the community.
But she pinned any blame not on the policy, but on the lack of resources to fund it.
"Mental health services in some areas are struggling under such severe pressures that they simply cannot follow up patients, who may then become lost to the system.
"Once someone is discharged from the psychiatric services, it is often hard to get back in.
"Families and friends who may notice a deterioration in a person's mental state are often ignored, and there are not enough beds or staff to ensure a quick response.
"We need a huge increase in resources, and vigilance so that mentally ill people can live safely in the community and the public can have confidence that they are receiving reliable mental health care."
The draft Mental Health Bill currently going through parliament which would enable the forced detention of mentally ill people deemed to pose a risk to the public who refused to take their medication.