An average of one person a week dies at the hands of a mentally ill patient, according to an official report.
And almost a third of the killings are carried out by people who had been judged not to be a risk to the public.
The report has been produced by Professor Louis Appleby, the Government's national clinical director for mental health, for the National Patient Safety Agency.
He concluded that health staff are failing to identify those patients most at risk of killing someone.
His findings come after an inquiry into the killing of retired banker Denis Finnegan by paranoid schizophrenic John Barrett in London's Richmond Park found significant failings in the risk-management process.
Speaking ahead of the report's publication, health minister Rosie Winterton denied that the Government is failing to protect people from the dangerous mentally ill, but conceded the Government could not force discharged patients to take their medication.
Ms Winterton said: "One of the problems at the moment is for the small number of people who are detained in hospital.
"If they are discharged there are some patients who don't continue to take medication, who don't continue to stay in touch with mental health services. At the moment we have no power to be able to say we want people to comply with treatment."
Marjorie Wallace, chief executive of the mental health charity Sane, said one in three of these homicides could be prevented.
She said: "It is not a question just of resources or laws but, as has been highlighted, the failure to identify people at risk when all the red alerts were in hindsight flashing."
