Conflicts in Afghanistan and Iraq have driven up the numbers of refugees worldwide in the past year, a United Nations report says.

At the end of 2007, the number of refugees and internally displaced people rose by 2.5 million compared to the previous year, according to a global trends report released Tuesday by the UN refugee agency.

The number of refugees rose to 11.4 million, while those internally displaced increased to 26 million.

Between 2001 and 2005, the number of refugees had been steadily declining as many began returning home, but the trend reversed in 2006.

"Now, unfortunately, with the multiplication of conflicts and the intensification of conflicts, the number is on the rise again," said UN High Commissioner for Refugees Antonio Guterres.

Guterres spoke to the Associated Press amid tents, food rations and jugs of water set up as part of a mock refugee camp in London's Trafalgar Square ahead of World Refugee Day on Friday.

Rising food prices, environmental degradation and bad governance are also generating instability around the world and causing "new patterns of forced displacement," he said.

"People being forced to move, unfortunately, will be one of the characteristics of the 21st century," said Guterres.

The report notes that the rise in refugee numbers is influenced by changes in its methodology for estimating refugees in industrialized countries and reclassification of certain groups.

Nearly half the world's refugees are from Afghanistan and Iraq. Of the three million Afghans, most went to neighbouring Pakistan and Iran. The majority of the two million Iraqi refugees are in Syria and Jordan.

"We have seen the voluntary return of over 120,000 Afghans from Pakistan. This basically shows that there are areas that are safe and that people are able to go back to," said Abraham Abraham, a Canadian representative of the UN High Commission for Refugees.

"This is a movement that takes place whenever people feel happy, comfortable about going back home."

Most refugees end up taking shelter in neighbouring countries. UNHCR said the top refugee-hosting countries include Pakistan, Syria, Iran, Germany and Jordan.

With files from the Associated Press