I plan to travel to UK but the permanent address on my passport is old one, moved from there few years back. I need to understand what address should I be putting in the visa application form. Will it be the old one that's on the passport or my current permanent address?
Per the guidance, the visa form is asking for your current address, where you live now.
This is the address where you live rather than your family home. You MUST include your full residential address details including house number or name/street/village/town/city/state/province/postal or zip code/country.
What's your citizenship and which country are you applying from? I don't know UK specifics, but generally in many Western countries there's no expectation that your passport will contain an accurate address (or in fact any address), it is understood that you're free to move about anywhere without officially registering, making a passport change, etc. So, I would guess that the address listed on the passport doesn't matter, and you should just list your real address on your application. However, the best thing to do would be to contact the consulate / visa office where you'll be applying, because sometimes there are strange rules specific to a particular country pair (e.g. it may be the case that in some countries your visa application will be delayed or will raise some red flags if you don't update your passport address to your real one before applying). I think the chances of something like this are small though.