The world's most populous nations, China and India, have improved the lives of more slum dwellers than any other country, the UN-Habitat's newly launched State of the World Cities 2010/2011 says.

The report which was launched in Nairobi on Monday night says that the two countries have lifted at least 125 million out of slums between 1990 and 2010.

"China's achievement has been the most spectators, with improvements to the daily conditions of 65.3 million urban residents who were deprived of shelter," the report says.

Proportionally, the report says China's urban population living in slums fell from 37.3 percent in 2000 to some 28.2 percent in 2010, a relative decrease of 25 percent.

Overall, the report finds that 227 million people in the world have moved out of slum conditions since 2000. At the same time, the study also stresses that 55 million new slum dwellers have been added to the global urban population since 2000.

The UN report finds that the number of people living in slums has risen from 777 million in 2000 to 830 million in 2010, and warns that unless urgent steps are taken the number could rise to 900 million in 2020.

Despite growing inequality due to the country's rapid economic advance, the report says Beijing has improved living conditions by embracing economic reforms and implementing modernization policies that have used urbanization to drive national growth. "Its pro-growth polices, among which is a focus on improving the lives of the poor, have resulted in a reduction in the number of slum dwellings," it says.

While countries comfortably achieved the Millennium Development Goals to lift 100 million people out of slums by 2020, the UN says slum numbers will inevitably increase in the short term.

"The current global financial crisis poses a risk that advances in slum upgrading and prevention may be reversed. In addition, some gains can be undone by responses that do not take population growth into account," the report warns.

The report which focuses on Bridging the Urban Divide says programs aimed at old villages within the limits of expanding cities and new slums have used a mix of regulation and development mechanisms to spur modernization and provide cheap homes for at least 8 million migrant workers who flock to the cities annually.

According to the report, particularly successful has been a strategy to enable slum dwellers to gain access to more than 20 million new and affordable housing units. "The State did this by using equity grants as a mortgage to get leases on cheap housing built by developers and by giving developers special tax rates to encourage development of cheap homes," it says.

The report says India has lifted 59.7 million people out of slums conditions since 2000. Slum prevalence fell from 41.5 percent in 1990 to 28.1 percent in 2010. This is a relative decrease of 32 percent. "Lessening poverty and improving conditions in slums are part of India's urban development policy," says the report.

It notes that India has achieved this by building the skills of the urban poor in their chosen businesses and by providing them micro-credit and by providing basic services and development within slum settlements; thus improving living conditions.

But increasing urbanization has led to many more new slum- dwellers, meaning the total number now living in crowded, substandard housing – often without safe drinking water and sanitation – has increased by nearly 55 million people since 2000.

The worldwide number of slum-dwellers now stands at 827 million and is on course to grow to 889 million by 2020.

According to the report, India has made strides it improve slums by providing security of tenure to poor families living in unauthorized settlements, improving their access to serviced low- cost housing and subsidized finance; and by encouraging the poor to take part in the decision making and community development efforts. "After these two countries, the most noteworthy improvements in Asian slum conditions were in Indonesia, Turkey and Vietnam," the report says.

Two-thirds of the world's slum-dwellers now live in Africa, the report found, the only continent to have made little progress in reducing slum numbers in the last decade.

Although North Africa made considerable progress reducing slum numbers, the 34 sub-Saharan African countries between them only improved the living conditions of 17 million slum-dwellers in the last decade.

These countries now have virtually 200 million people -- over 60 percent of their populations – living in slums. This proportion was only a slight improvement on 2000 figures.

Continual Chinese and Indian economic growth has radically reduced the numbers of people living in unacceptable housing in those countries but the most improved countries were Indonesia, Morocco and Argentina, which each reduced their slum populations by more than 40 percent.

In Africa, the report says, Morocco has moved 2.4 million out of slum conditions over the past 10 years, a 45.8 percent reduction in slum prevalence due to strong political leadership, clear targets and adequate budget resources.

It says Egypt reduced its proportion of slum dwellers by 39 percent; slum prevalence fell by 28.1 percent of the urban population in 2000 to some 17.1 percent in 2010.

"In absolute numbers, the government of Egypt improved the living conditions of five million people. Together, Morocco and Egypt account for two-thirds of progress in this Africa sub-region, " the report says.

Conflicts have increased the number of slum-dwellers by at least 10 percent in Central African Republic and Cote d'Ivoire. Elsewhere, countries like Ethiopia, Benin and Malawi now have more than 70 percent of their populations living in slums.

Southern Asia now has 190.7 million slum dwellers (35 percent of the population) and eastern Asia 189.6 million (28.2 percent).