The report by the United Nations and the World Bank said that while most countries are planning for a flu pandemic, the worry was that "many plans have not been tested and may well fail once the next influenza pandemic starts."
"Coming on the heels of a World Bank study suggesting that the economic cost of a pandemic could top a staggering three trillion dollars, this continuing lack of preparedness remains a cause of concern," it noted.
According to the World Bank, a flu pandemic of moderate intensity could cut global gross domestic product by two percent, while a severe flu pandemic would slash global gross domestic product by nearly five percent, or more than three trillion dollars.
The report said that even a mild flu pandemic might kill 1.4 million people worldwide, while the death toll from a severe global outbreak could reach 70 million.
"Considering that pandemic preparedness was largely unaddressed by the world's nations three years ago, the widespread awareness and action seen today is a major achievement," said David Nabarro, a Briton who is the UN System influenza coordinator.
"But more needs to be done to ensure that we are ready for this kind of major global crisis," he added.
He made the remarks ahead of an international ministerial conference on Avian and Pandemic Influenza scheduled for Friday to Sunday in the Egyptian Red Sea resort of Sharm el-Sheikh.
The parley is to review global progress and plan future efforts for pandemic preparedness and bird flu control.
No countries reported new infections of their poultry by the H5N1 bird flu virus in the first nine months of 2008, as compared with four in the same period last year, the UN report said.
Nabarro noted that the bird flu virus was entrenched only in two countries: Egypt and Indonesia.
The study also pointed out that only 20 countries which have previously reported infections experienced outbreaks between January and September 2008, down from 25 in the same period last year.
It added that to date 245 people have died of bird flu.
"The pace of sporadic human infections and deaths from H5N1 has slowed since last year, with 28 confirmed deaths in 2008 compared to 59 in 2007, but the threat of an influenza pandemic remains," it added.
The UN is coordinating a drive by governments, donors, international agencies and corporations to stop the spread of bird flu while preparing for a fast-spreading human influenza pandemic.
There have been three such pandemics in the past century.