We propose an extended quantum theory, in which the number of degrees of freedom K behaves as FOURTH power the number N of distinguishable states. As the simplex of classical N--point probability distributions can be embedded inside a higher dimensional convex body of mixed quantum states, one can further increase the dimensionality constructing the set of extended quantum states. The embedding proposed corresponds to an assumption that the physical system described in N dimensional Hilbert space is coupled with an auxiliary subsystem of the same dimensionality. The extended theory is shown to be a non-trivial generalisation of the standard quantum theory for which K=N^2. Imposing certain restrictions on initial conditions and dynamics allowed in the quartic theory one obtains quadratic theory as a special case. We discuss the question, how the theory of information processing looks like in the framework of the generalised quantum theory. In particular we propose a scheme of extended dense coding, in which one transmits two qubits by sending one extended bit, provided it was initially entangled with the extended bit of the receiver.