The proportion of people living on less than $1 a day decreased from 40 to 21 per cent of the global population between 1981 and 2001, says the World Bank's latest annual report.

The president of the bank, James Wolfensohn, said in his overall review that the past year had brought with it signs of hope and progress, but it had also brought signs of concern in the fight against global poverty.

On a positive note, new data this year showed that the number of poor people continues to fall. Development indicators were clearly improving in countries that had laid good foundations for growth.

The progress, though, was uneven across the globe. Growth in East Asia had meant that there were 500 million fewer people living below one dollar a day in 2001 than in 1981.

The number of poor people had also fallen in South Asia and in the Middle East and North Africa, though less dramatically than in  East Asia.

However, the absolute number of poor people had risen in African, Latin America and the Caribbean, and Europe and Central Asia.

Wolfensohn recalled his statement at the last annual meeting that the world he 'saw today was a world out of balance.' Of the six billion people of the world today, one billion people live in wealthy countries. They accounted for 80 per cent of the world's gross domestic product, while the other 5 billion have 20 per cent.

While rich countries spent $700 billion a year on defence and transferred $325 billion to agriculture, they devoted only $68 billion as developmental aid.

These global imbalances are reflected in the daily lives of poor people around the world. Two billion people have no access to clean water, 115 million children never get the chance to go to school, and some 38 million people -- 95 per cent of them in developing countries -- are HIV-positive, with little hope of receiving treatment.

Most of the global development goals will not be met in most countries by the 2015 deadline, the report said.

"So the world is at a tipping point: either we in the international community recommit to delivering on the goals, or the targets we set in a fanfare of publicity will be missed, the world's poor will be left even further behind, and our children will be left to face the consequences," said Wolfensohn.

During the next 25 years, Wolfensohn pointed out, about 2 billion more people would be added to the global population, but only 50 million of them would be in the richer countries.

The vast majority will be born with the prospect of growing up in poverty and becoming disillusioned with a world they will inevitably view as inequitable and unjust. Terrorism is often bred in places where a fast-growing youth population has no hope," he said.

"We cannot ignore the rise of this more youthful world," said Wolfensohn. "We need to face these realities, and we need to act on three issues in particular."

"First, world trade talks, which can reduce agricultural protectionism and thus poverty in developing nations, must be pushed forward. Developing countries will gain nearly $325 billion by 2015 as a result, enough to lift 140 million out of poverty. Second, aid flows need to rise well above current commitments, and they need to be used more effectively. Although some increases have been made in recent years, almost a doubling of current development assistance levels will be required to meet the Millennium Development Goals," he said.

It was essential that donor countries fully replenish the International Development Association, the fund that delivers proven results for the world's poorest nations.

"Third, we must push forward in relieving the debt burdens of the poorest countries by providing a larger proportion of additional aid in the form of grants rather than loans," Wolfensohn added.