The State has been ranked 8th in the world on human development, according to the UN Human Development Report for 2005.
The report, published today, places the Republic 8th in the world for 2003, up from 10th in 2002 and from 17th in 2000.
Commenting on the report, Minister for Social Affairs, Seamus Brennan, said that as a country we should be justly proud of our achievement in such a competitive world.
He said the high placing can be mainly attributed to its economic success, which puts the State second in the world, after Luxembourg, in terms of the wealth we produce per capita.
Minister Brennan said: "As the report also shows, Ireland has achieved significant progress in the whole area of social development.
"However, it must be acknowledged that we still have ground to make up in improving life expectancy, educational attainment and adult literacy which are in part legacies of low social investment in the past, when Ireland was a much poorer country than it is today," said Mr Brennan.
Minister Brennan particularly welcomed the inclusion, for the first time, in the 2005 report, of a section entitled: "Two Tales of Irish Poverty" which he says clears up much of the confusion on the progress being made in reducing income poverty.
"This assessment concludes that if the 1994 poverty line at 60 per cent of annual median income is adjusted by the change in consumer prices up to 2000, - the anchored poverty line approach - poverty in Ireland reduced by 55.9 per cent over the period.
"When the poverty line of 60 per cent of annual median income is adjusted in line with overall income increases, the preferred measure of the EU, poverty is found to have risen in Ireland by 11.3 per cent over the same period," he added.
Mr Brennan said this type of outcome occurs during a period of rapid economic growth.
"The indicator therefore shows that during a period of rapid economic growth not all incomes in Ireland grew at the same rate and that low incomes grew at a slower rate.
"The priority now is to maintain and, where resources permit, increase social welfare payments in real terms, while facilitating increased employment participation - the main route out of poverty and social exclusion.
"This means removing obstacles to employment, such as the absence of affordable child care, and promoting access to more and better jobs through sound economic management and policies and through education and training to enhance employability and skills," said the Minister.