The world is failing to guard against the inevitable spread of a devastating flu pandemic which could kill 50 million people and wreak massive disruption around the globe, the Government has warned.

In evidence to a House of Lords committee, ministers said that early warning systems for spotting emerging diseases were "poorly co-ordinated" and lacked "vision" and "clarity". They said that more needed to be done to improve detection and surveillance for potential pandemics and called for urgent improvement in rapid-response strategies.

The Government's evidence appeared in a highly critical report from the Lords Intergovernmental Organisations Committee, which attacked the World Health Organisation (WHO) as "dysfunctional" and criticised the international response to the threat of an outbreak of disease which could sweep across the globe.

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The Government said: "While there has not been a pandemic since 1968, another one is inevitable." Ministers said it would could kill between two and 50 million people worldwide and that such an outbreak would leave up to 75,000 people dead in Britain and cause "massive" disruption.

Peers joined ministers calling for urgent action to build up early warning systems across the Third World that can identify and neutralise outbreaks of potentially deadly new strains of disease before they are swept across the globe by modern trade and travel. Peers also called for new action to monitor animal diseases, warning of the potentially disastrous effects of conditions such as the H5N1 bird flu virus jumping to humans and demanded that Britain step up funding for the WHO to tackle the threat.

With international tourist journeys now reaching 800 million a year, giving unprecedented potential for epidemics to spread across borders, and many cities rapidly growing in developing countries, which would provide "fertile ground" to spread disease, peers on the committee warned that conditions such as Sars, avian influenza and ebola "have the potential to cause rapid and devastating sickness and death across much of the world if they are not detected and checked in time".

Their report said: "We have been warned that an influenza pandemic is overdue and that when – rather than if – it comes the effects could be devastating, particularly if the strain of the virus should be of the H5N1 variety that has been seen in south-east Asia in recent years.

"While much progress has been made in the past 10 years in improving global surveillance and response systems, much remains to be done if we are to detect new strains of the virus and counter them before they have had the chance to spread."

The report called for a fundamental overhaul of the WHO's regional offices around the world. "Given the threats to global health that we face from newly emerging infectious diseases, a dysfunctional organisational structure within the world's principal policy-making, standard-setting and surveillance body simply cannot be afforded."

A government briefing given to the committee warned: "Not all countries have the resources or capacities to put in place a seasonal influenza vaccination policy and, in the event of an influenza pandemic, it is also recognised that current stock will not meet world-wide demand.

"There needs to be an improvement to rapid response strategies in poorer, more vulnerable, countries."

Ministers warned that there was "no agreed vision or clarity over roles" among the international bodies working in the field.

Lord Soley, the committee's chairman, welcomed efforts to guard against a flu pandemic but warned: "They are not good enough. We have a pandemic twice every century. If something developed in a country with a developed healthcare system you would stop it and stop it before it went round the world. You cannot have that confidence about the developing world," it warned.

Norman Lamb, the Liberal Democrats' health spokesman, likened the threat from a pandemic to the threat of international terrorism. He said: "Globally there has been massive attention to the threat from terrorism and rightly so. But the potential for loss of life from a pandemic is massive, enormous and yet we stare a disaster in the face and we see a chaotic, uncoordinated and incoherent international response to it.

"Disease can spread like wildfire. We have to dramatically step up the response."

A spokeswoman for the Department of Health acknowledged that "more clearly needs to be done improve detection, surveillance and general response capacity building". She said Britain was working to improve the international response to bird flu and a potential pandemic and was working to improve international co-ordination on the issue.

She added: "We agree that there is considerable scope to improve the effectiveness and coherence of intergovernmental organisations working in this area."