The magnetic properties of strongly paramagnetic dilute alloys are discussed on the basis of the generalized Landau theory of phase transitions including the spatial dependence of the coefficient of M² and the term involving the gradient of the magnetization M. Application is made to dilute Pd-Ni alloys, both in the limit of extreme dilution and near the ferromagnetic phase. The corresponding critical concentration is obtained from first principles and its value is in good agreement with observation. Other applications of this new approach are envisaged.