A Security Council investigation finds that up to half of food aid sent to Somalia is diverted from those in need to corrupt business leaders, militants and local UN officials.
The report, shown to Channel 4 News, suggests that the entire food distribution programme be rebuilt in order to break what it describes as a corrupt cartel of Somali distributors.
"Some humanitarian resources, notably food aid, have been diverted to military uses," the UN investigation says.
"A handful of Somali contractors for aid agencies have formed a cartel and become important power brokers — some of whom channel their profits, or the aid itself, directly to armed opposition groups."
The report which has not yet been made public is expected to be presented to the Security Council next Tuesday.
Last year the head of the UN's £580m aid operation in Somalia launched an inquiry after Channel 4 News revealedthat thousands of sacks of food had been diverted from refugees and sold by Somali businessmen on the open market.
Channel 4 News found piles of maize, wheat and cooking oil - clearly marked "not for re-sale" and bearing the UNWorld Food Programme (WFP) logo - for sale from multiple warehouses and shops in the main market of the capital, Mogadishu, last June.
"We buy aid from WFP staff directly or from people they employ" a market trader toldChannel 4 News.
"They take us to the warehouses used by the WFP and let us load our lorries. The goods are freely available and you can buy as much as you like, but we usually buy no more than 500 to 1,000 sacks at a time. Just a ton or half a ton a day can be shifted more discreetly."
Channel 4 News was told that "fictional refugee camps" were also being invented by some traders as a way to allocate food that could then be sold.
"You go to the WFP office and fill in an application form to create a camp" a market trader told Channel 4 News. "When we receive the food, we give out some, and then divide the rest between ourselves and the WFP guys, who negotiated the deal."
When Channel 4 News approached the WFP last year Peter Goossens, WFP Somalia Director, described food for sale as a "minor phenomenon".
"There is no big corruption going on," he claimed.
At the time the WFP accepted that so-called "gatekeepers" - often powerful Somali clans - may have siphoned off aid after it reached refugee camps, but it rejected claims that WFP staff were party to corruption.
In December an internal and unpublished WFP investigation into the sale of UN supplies found "no evidence of wrongdoing" by staff.
This new investigation commissioned by the UN Security Council also found that in addition to the diversion of food aid, a number of regional authorities were collaborating with pirates while Somali government ministers sold diplomatic visas for trips to Europe.
"Somali ministers, members of Parliament, diplomats and 'freelance brokers' have transformed access to foreign visas into a growth industry, matched possibly only by piracy," the report says.
Officials have denied the visa problem is widespread. The World Food Programme said it had not yet seen the report but was investigating its allegations.
Somalia's foreign minister, Ali Ahmed Jama, told Channel 4 News: "We do not deny that there are abuses by some of the officials of WFP or some other UN officials. We are not defending the UN agencies in any way.
"But only fairness demands that everybody should be heard and that everybody should be heard before allegations of that nature are made."
A DFID spokesperson said: "It would be inappropriate to comment on a leaked report, but we take any allegation of misuse of aid very seriously.
"We are not currently providing funding to the World Food Programme in Somalia following previous allegations of corruption in their programme. We continue to press the World Food Programme to explain the findings of their recent internal investigation and have joined other donors in calling for a full account of the action WFP is taking to ensure aid is getting to those who need it.
"Somalia remains one of the most dangerous places in the world to deliver aid but our help is getting through. UKaid has already reached over 1.2m people in Somalia this year and today's announcement of an extra £7.5m will help to reach more of the 3.2m people in desperate need of help."
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