Drastic action is needed by the world's leaders if they are to keep their promises to end extreme poverty, the 2005 UN Human Development Report warns.
Its 177-nation ranking puts drought-hit Niger last for living standards, with 12 African nations among the bottom 18.
The report, a week before a major UN summit, calls for changes in aid, trade and security policy to halt the slide.
The goals include pledges to halve extreme poverty, reduce child deaths by two-thirds and achieve universal primary education by 2015.
Time 'running out'
Kemal Dervis, a UN Development Programme (UNDP) administrator, warned that the world's governments had to act quickly if they wanted to meet those targets.
"The world has the knowledge, resources and technology to end extreme poverty, but time is running out," he said.
Overall, the report shows that living standards are improving, with Vietnam's reduction of child deaths and Bangladesh's gains in education and life expectancy among the success stories.
But unless the international community steps in, the poorest nations will continue on a downhill trend even as others progress, the UNDP warns.
The BBC's David Loyn says some progress has been made following new commitments by the G8 group of the world's richest countries.
However, this year is the last chance to put progress back on track if poverty is to be halved by 2015, our correspondent says.
More child deaths
The UNDP points out that the gap between the world's rich and poor is widening - and inequalities are increasing even within those poorer countries making progress.
For example, the gap between child mortality rates for rich and poor in Ghana, Zambia and Uganda is growing, while in India, 50% more girls under five die than boys.
Failure to cut infant mortality by two-thirds could mean 41 million more child deaths by 2045, the date the target will be met on current trends, the report says.
The UNDP's analysis of key indicators such as life expectancy and income has found that 18 of the world's poorest countries - with a population of 460 million - are doing worse in most areas than they were in 1990.
Drought-stricken Niger comes bottom of the Human Development Index (HDI) table, a list topped by Norway.
The fact 12 of the 18 nations which have slid back are in sub-Saharan Africa is closely linked to the effects of HIV/Aids and conflict, the report says.
Life expectancy in Botswana has fallen 20 years since the 1970s to just 36, while South Africa has dropped 35 places in the HDI since 1990. Both declines are largely down to Aids.
The other six to have fallen back are former Soviet states in Central Asia and Eastern Europe, with Ukraine and Tajikistan among them. The main factors are falling life expectancy resulting from economic disruption.
Kevin Watkins, the report's chief author, said: "The index shows in clear, cold numbers that many countries are not only failing to progress, but are actually slipping backwards, and they will continue on that downhill path unless the international community steps in to help with more resources and new policies.
"The world leaders who are gathering here at the UN next week should take this data to heart, because they have the power to reverse these deeply disturbing trends."
Evidence that the risk of conflict can be linked to a country's low HDI ranking points to the urgent need for changes in global security policies, the UNDP says.
"Violent conflict is one of the surest and fastest routes to the bottom of the HDI table, and a strong indicator for a protracted stay there," the report says.
Of the 32 countries at the bottom of the list, 22 have experienced conflict at some point since 1990 and five have gone down in the HDI ranking.
The report also highlights what it says is the need for rich countries to increase aid as a proportion of national income and deliver promised resources more quickly and efficiently.
Since 1990, income per capita in rich countries has increased by $6,070 in constant prices, while aid spending fell by $1 per capita, the report points out.
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