Police in the US allege that a veteran in his 80s was held hostage for four years by a man who was looking to steal welfare payments.

The victim - who police said has advanced dementia - is reported to have been held in a motel room in New York state.

He is reported to have had no known friends or relatives.

"We believe he is the recipient of a tremendous amount of money on a monthly basis," Highland Police Department chief Jack Quinn told local station WABC-TV.

According to the station, the victim told police he thought he had only been in the room for a number of days rather than years.

It is believed that police were tipped off about the situation by neighbours, with one having shared footage of the elderly man being physically abused.

Associated Press reports that 43-year-old Perry Coniglio was arrested in connection with the case.

The suspect faces charges including grand larceny and unlawful imprisonment.