In a report titled Paying the Price released on Monday, the British aid agency said countries such as the US, Germany and Japan had reneged on pledges made in 1970 to give 0.7% of their gross national incomes (GNI) in aid.
As a result, up to 45 million children will die by 2015, Oxfam director Barbara Stocking said. "The world's poorest children are paying for rich countries' policies on aid and debt with their lives.
"Thirty-four years on, none of the G8 members have reached this target and many have not even set a timetable."
The aid budgets of rich nations are half what they were in 1960, Oxfam said, while poor countries are having to cough up $100 million a day in debt repayments.
For rich countries this is not about charity - it is about justice," Stocking said. "As rich countries get richer, they're giving less and less. This is a scandal that must stop."
The UN is committed to halving world poverty by 2015, but to date is making painfully slow progress towards that goal.
"As rich countries get richer, they're giving less and less. This is a scandal that must stop"
Oxfam director Barbara Stocking
Oxfam said the US was giving just 0.14% of GNI in aid - one-tenth of what it spent on invading Iraq - and much aid from the European Union arrived a year late.
It said US aid would not hit the target to halve world poverty until 2040, and Germany would not hit it until 2087. Japan was actually cutting its aid budget.
The report comes as the United Nation's children's rights organisation Unicef prepares to release its annual report on the state of the world's children on Thursday and as a leading medical journal accused it of misdirecting its efforts.
Unicef has said the lives of more than 1 billion children are at risk due to poverty, war and disease, with one in six very hungry, one in seven denied healthcare, one in five denied access to safe water, and one in three having no toilet at home.