Oil pollution in the Niger Delta has gone further than previously thought and a clean-up will take 20 years and cost over $1bn (£614.6m), the UN said.
Half a century of oil production has had a "disastrous impact" on the swamps, mangroves and creeks of the south eastern Nigerian region of Ogoniland, forcing residents to breathe contaminated air and drink polluted water, according to a study by the UN Environment Programme (UNEP).
"Since average life expectancy in Nigeria is less than 50 years," the study concludes, "it is a fair assumption that most members of the current Ogoniland community have lived with chronic oil pollution throughout their lives."
The report was funded by Royal Dutch Shell and released only 24 hours after it admitted responsibility for two oil spills in Ogoniland that could cost it hundreds of millions of dollars.
UNEP, which insists its findings were unrelated to Shell's admission, called for Nigeria's government to work with the oil industry to conduct a full assessment and clean-up of the damage.
One community in western Ogoniland was found to be drinking water from wells contaminated with 900 times the safe amount of known carcinogen benzene, while other areas were still facing pollution from spills 40 years ago.
In 10 of the 15 sites SPDC, Shell's former joint venture in the region, claimed to have decontaminated, UNEP investigators discovered there was still pollution and the company was found to have only performed surface clean ups after spills.
The UN report concludes that the firm failed to meet industry best practice standards or its own guidelines, and needed to immediately "review and overhaul" its procedures.
The Nairobi-based Environment Programme call for a "restoration fund" to be set up with an initial $1bn to be put up by the government and Shell to cover the first five years of an estimated 25 to 30-year rehabilitation.
Nigeria's President Goodluck Jonathan yesterday welcomed the UN findings and agreed to set up a commission at Shell's expense on the basis of "polluter pays" with no further details on who might foot the bill for a full clean up.
The company has said it will abide by Nigerian law.