Presidential elections in August were beset by claims of fraud, many upheld by the election commission and Western nations warned Hamid Karzai, the president, after the poll that he must tackle corruption in order to secure their continuing support.
On Monday, Kabul announced that it would establish a new unit to fight corruption at the highest levels, which is viewed as aiding the fight against Taliban forces.
It is the third year in a row that Somalia, which has been largely without a functioning central administration for years and is riven by violence between opposition groups and government forces ,has been rated as the world's most corrupt country.
"The international community must find efficient ways to help war-torn countries to develop and sustain their own institutions"
head of Transparency International
Myanmar was ranked third-worst for corruption, while Iraq and Sudan were in joint fourth place.
Transparency International said that countries whose infrastructure had been "torn apart" by conflict needed help from outside to prevent a culture of corruption taking root.
"The international community must find efficient ways to help war-torn countries to develop and sustain their own institutions," Huguette Labelle, the head of Tranparency International, said.
"Stemming corruption requires strong oversight by parliaments, a well performing judiciary ... anti-corruption agencies, vigorous law enforcement ... as well as space for independent media and a vibrant society."
New Zealand was found to be the least corrupt country, followed by Denmark, with Singapore and Sweden close behind.
Transparency International attributed the strong performance of those countries to their "political stability, long-established conflict of interest regulations and solid, functioning public institutions".
The rankings are based on perceptions of the degree of corruption as seen by business people and country analysts.
African countries accounted for half of those in the bottom 20 of the list, including Angola which is now the continent's top oil exporter after emerging from a 27-year civil war.
But it was not just countries riven by conflict that saw their ratings slide. Italy, a member of the so-called Group of Eight industrialised countries came in at 63rd on the list, from 55th last year.
Fellow European Union member Greece fared even worse, at 71st, slipping from 57th.