The United Nations Development Programme has downgraded Fiji in its latest Human Development Report by 11 points.
For the first time, Fiji has dropped to 92nd in world ranking, down from 81st a year ago.
This is well below Tonga's ranking at 54 and Samoa at 74.
The UNDP's Human Development Report measures the quality of life in a country based on factors such as life expectancy, literacy rates and income per head of population.
The 2005 report is based on data collected in Fiji in 2003.
Meanwhile, Fiji's minister for poverty alleviation has told the Commonwealth Parliamentary Association meeting in Nadi that more than 200,000 of its citizens, or a quarter of its population, are living in poverty.
Adi Asenaca Caucau said in addition, more than 100,000 others are experiencing various forms of hardship.