ROME - The U.N. agency known for battling world hunger risks "terminal decline" after being starved of cash by member states and mismanaged, a report said on Thursday.

The unprecedented, nearly 400-page review of the Rome-based U.N. Food and Agricultural Organisation (FAO) called for an urgent, radical restructuring to rescue the 62-year-old agency.

"Is this going to frighten members ? I think they should be a bit frightened right now. I think they should be frightened about this organisation which they own," said Keith Bezanson, who presented the final version of the independent evaluation.

A draft version was released in August.

The report chastised FAO's management for not making proper use of its enormous pool of talent, and for not reforming enough in the past, but also acknowledged that a 31 percent slide in FAO resources from 1994 to 2005 was partly to blame.

For any future reform to be successful, member states would have to increase resources available to the FAO. But it was not clear whether big donors were ready do that, Bezanson said.

"Frankly, some members are saying we want to see the reform first and then we'll talk about growth (in finances)," he said.

The United States, the FAO's biggest contributor, helped finance the study. It cost upwards of $4 million and claims to be possibly the largest and most ambitious evaluation ever of a global inter-governmental organisation.

"Our initial reaction to the report is positive," the U.S. diplomatic mission to U.N. agencies said. "FAO has a critical role to play ... but institutional reform is necessary."

On headline-grabbing issues like bird flu and locust swarms that ravage crops in Africa, FAO was given a mixed review.

On bird flu, the report said the crisis "demonstrated both FAO's strengths and weaknesses."

It cited a lack of funding and inability to coordinate quickly with other bodies, like the World Health Organisation.

"(FAO) was plagued by management uncertainties and significant bureaucratic delays," it said. FAO said its management agreed with most of the 109 recommendations for restructuring laid out in the report, but added that it would issue a more detailed response next week.

"The director-general and the entire management team (are) fully committed to leading a process of transformation ... however far-reaching in scope or arduous to implement," it said.

But a survey of FAO employees showed scepticism. Some 94 percent of employees agreed reform was necessary, but an equal 94 percent said they strongly doubted it would happen.

"This is a tragedy in the making -- a will to change ... but cynicism about whether that change will occur," Bezanson said.