25% of main roads are jammed daily for one hour
The most congested roads, the longest commuting times and some of the highest bus and rail fares can be found in the UK, according to the Commission for Integrated Transport.
Transport Secretary Stephen Byers put much of the blame for the state of the railways at the door of Railtrack and previous Conservative Governments.
But he said he accepted this government would be judged on whether it improves the transport system.
Professor David Begg, chairman of the commission, said the report was a "stark demonstration" of 50 years of neglect and under-investment.
He also said the government's £180bn, 10-year plan for restructuring the UK's transport system would only start to bridge the gap.
Mr Byers admitted to the BBC there were major problems with British transport.
But he said he was confident his 10-year plan would overcome them.
'The money is coming through'
He told BBC Radio 4's Today programme: "The 10-year plan started in April, the money is coming through.
"Most investors can see a clear distinction between the failed privatisation that was Railtrack and the need to develop public private partnerships for our transport system and the money is coming through and people will see a real difference and I will be content as transport secretary to be judged on those improvements."
In the commission's report - the first comprehensive comparison between transport investment in Britain and Europe - British motorists and passengers come out worst on almost every single count.
The roads were easily the most congested - 25% of main roads were jammed for at least an hour a day but less than 10% of the main highways got blocked in Germany and France.
The average daily commuting time was 46 minutes while Italians, for example, got to work in half the time.
The average British family spent 15% of its income on transport - again way out of line with most of its European neighbours.
Britain remained the most car-dominated country in Europe.
Eighty seven per cent of road journeys were by car and only 12% were by public transport.
Fuel tax was also the highest in Europe, and only Denmark and Sweden had higher rail fares.
Tough decisions
The commission was set up in 1999 by John Prescott when he was Secretary of State for Transport, to offer independent advice on the government's long-term transport plans.
It welcomed the 10-year transport plan, published last year, calling it a "long awaited focus on integrated policies and a step change in levels of investment".
But Prof Begg added: "This report demonstrates what a mountain we have to climb.
"The decisions that we take now as a nation will determine whether we end up with a US-style car culture or a sustainable European multi-model system."