The Kenyan government says is not surprised by news that Kenyans' standard of living has fallen drastically in recent years.
In 2002 Kenyan voters hoped Narc would bring them jobs
The country has fallen 20 places in three years in a UN report ranking prosperity in 177 nations.
The planning minister said he welcomed the report as it would help them find strategies to tackle these issues.
The Narc government swept to victory almost three years ago promising to tackle unemployment and corruption.
Most Kenyans live below the poverty level of $1 a day.
Planning Minister Peter Anyang Nyongo told the BBC that the 2005 UNDP's Human Development Report "is trying to tell us as it is."
"We can [now] adopt the right policies to develop our country, and I think it is welcome," he said.
Mr Nyongo tried to put a gloss on the depressing figures, at a time when his government is spending $8.5m of taxpayers' money on its own study to determine poverty levels in the country.
The UNDP ranks Kenya 154 out of 177 countries, which are graded according to life expectancy, literacy and gross domestic product.
Under its headline "Kenyans getting poorer", Kenya's Daily Nation newspaper says the ranking is likely to shock Kenyans who provide skilled manpower to east and southern Africa.
But the BBC's Gladys Njoroge in Nairobi said she could find no-one on the streets of the capital to disagree with its findings.
People all said they were disappointed and dissatisfied with the government because jobs were so difficult to find.
Correspondents say the new scorecard could not have come at a worse time for the limping coalition government, which is embroiled in a bitter campaign for a November referendum on a controversial draft constitution that has split the country and cabinet.
A "No" vote - by disillusioned Kenyans - in two months' time could prove disastrous for the government, two years' away from the next general elections.
The UNDP says Kenya is unlikely to halve poverty by 2015 in line with the Millennium Development Goals.
"If Kenya were to achieve a 1% per capita growth rate on current [income] distribution patterns, it would not halve poverty until 2030," the Daily Nation quotes the UNDP office in Nairobi as saying.
Professor Joseph Nyasani, dean of Sociology at the University of Nairobi, agrees with the UN's research.
"Many of our leaders use their position to enrich themselves, to loot the economy and to take advantage of the masses. That has contributed also to our economic slump," he told the BBC's Focus on Africa programme.
In terms of development, Kenyans has been overtaken by their neighbours to the west, with Ugandans expected to live longer and receive a better education.
Kenya is now ranked 10 places below Uganda and only 10 above Tanzania, one of the world's poorest countries.
Previously a middle-income country, it is now in the low-income bracket.
The report ranked Norway as the most prosperous country and Niger as the least.
The bottom 20 countries were all African, including Nigeria - the continent's biggest oil producer - ranked 158.