'Food for work'

The minister said the fund would also invest in projects to get people back into jobs including "food for work" projects.

The fund would be supported by a new "global poverty alert" system that would link international organisations, aid agencies and research groups into a single network that would provide instant updates on the impact of the economic crisis on the poor.

This would include "real-time" updates using text messaging and emails.

The proposal will be put forward at next month's G20 meeting in London, which will be chaired by Britain

Alexander said the economic downturn could devastate the developing world as 90 million more people are forced into poverty by the end of next year.

The minister said that as a result of the global credit crunch it was estimated that the fight against extreme poverty could be put back by up to three years.

He said: "Although less affected by the immediate fall-out of the credit crunch, the economies of developing countries could be seriously damaged by a second wave of a credit crunch tsunami.

"As global trade and investment disappears, businesses close and jobs are lost. For people living close to the poverty-line, the impact could be devastating".

Children threatened

Brown said that more than two million children could die as result of the downturn [AFP]
Gordon Brown, the British prime minister, said: "The World Bank have estimated that over two million children could die as a result of the downturn. That must not happen.

"Today's talks are a key opportunity for the UK, donor countries and developing nations to look at how we find our way through the current economic crisis in a way that protects the world's poor."

Alexander said the UK would be keeping its promise to raise aid levels to 0.7 per cent of GDP by 2013 and other leading nations must do the same.

Financial analysts predict that foreign direct investment - the flow of cash from foreign companies into developing countries - will fall by 80 per cent from $929bn in 2007 to $165bn in 2009.
 
Remittances, cash sent by foreign workers to their home country, are also expected to drop by about $20bn next year.

Alexander said that a commitment to end extreme poverty made between the developed and developing world at Gleneagles in 2005 was now facing its third and potentially most devastating blow following last year’s oil and food price crises.