UNITED NATIONS -- Malnutrition rates among children in Iraq have halved since the United Nations oil-for-food program was set up six years ago, UN Secretary General Kofi Annan said Friday.

In a report to the Security Council, Annan said there had also been "major achievements" in transport and food handling and improvements in education and electricity, AFP reported.

But he drew attention to the "dire funding shortfall", due in part to a row between Iraq and members of the UN Security Council over the oil export pricing mechanism, and he appealed to both sides to help end it.

The council has scheduled a meeting on Tuesday to discuss the report. The program comes up for renewal on November 25, when its current 180-day phase expires.

Oil-for-food was set up in December 1996 to cushion Iraqi citizens from the crippling sanctions imposed on their country after it invaded Kuwait in August 1990.

Originally a conduit for food and medicine, it now includes 24 economic sectors and has a budget of more than 10 billion dollars a year, four-fifths of it for government-controlled regions in the south and center of the country and one-fifth for the Kurdish North, where the program is run by UN agencies.

"Preliminary findings indicate a reduction in the number of underweight children from 23 percent in 1996 to 10 percent in 2002," in central and southern Iraq, the report said.

The rates of chronic malnutrition had dropped from 32 to 24 percent and of acute malnutrition from 11 to 5.4 percent in the same period.

In northern Iraq, there was a 20 percent reduction in acute malnutrition, a 56 percent cut in chronic malnutrition and a 44 percent decrease in the incidence of underweight children in the under-five age group, the report said.

"The nutritional value of the monthly food basket distributed countrywide has almost doubled since 1996, from about 1,200 to about 2,200 kilocalories per person per day," it said. Among the "major achievements" in transport, traffic through the port of Umm Qasr -- Iraq's only outlet to the sea -- was 16 percent greater in 2001 than in the previous year, resulting in "the quicker discharge of vessels, the faster receipt of program inputs and a reduction in transport cost."

Goods traffic on the railways rose by 30 percent last year and reliable inter-city public passenger road and rail services had been restored, it said.

"Notable achievements in the health sector" included a 40 percent in major surgeries since 1997 in the center and south of Iraq as well as a reduction in communicable diseases such as cholera, malaria, measles, mumps, meningitis and tuberculosis.

"Countrywide there have been no cases of polio in the last 32 months," the report said.

"There are, however, shortages of pre-anaesthetic and reagents" because the UN Security Council's Sanctions Committee blocked imports of goods believed to have a military potential.

Cholera has been eradicated in northern Iraq and malaria is at an 11-year low, the report said.

"The distribution of 1.2 million school desks has met 60 percent of the need at primary and secondary schools in the center and south," it went on. "This is a great improvement compared with the situation in 1996, when primary and secondary school students were forced to sit on bare floors."

On the downside, the report noted that access to drinking water was "insufficient in both quantity and quality".

Water and sanitation networks are in a poor state of repair and an estimated 500,000 tons of solid raw or partially raw sewage is discharged daily into Iraq's two rivers, which are the main source of water, the report said.