The international aid system is too competitive and fails to acknowledge the role of small, local charities in disaster relief, a leading think tank has warned.

The London-based Overseas Development Institute (ODI) said on Tuesday that specialised charities are pushed out as large international NGOs compete.

"We need a radical transformation with the big players acknowledging the role of local organisations and other providers otherwise the Western dominated aid structure will progressively become irrelevant," the ODI's humanitarian director, Sara Pantuliano, said.

A report co-authored by Pantuliano, published on Tuesday, said the entire sector was too self-interested and preoccupied with growth, market share and output, rather than on achieving positive outcomes for beneficiaries.

"Despite the dedication of frontline aid workers, who work tirelessly and often at great personal risk,... these enduring, but outdated, assumptions compel organisations to be competitive, rather than collaborative," the report said.

Minor reforms had failed to tackle "unhealthy power dynamics and incentives at the heart of the struggling aid system", it said.

The remarks were targeted at United Nations agencies, governments and private sector companies preparing to debate changes to the aid system at the World Humanitarian Summit in May.

Aid groups in developing countries want the summit to agree what proportion of global humanitarian funding should go to national and local non-governmental organizations (NGOs) and a target date for this to be done.

Their share of the total funding pie halved to 0.2 per cent in 2014 from 0.4 per cent in 2012, and their share of the money received by all NGOs also fell to 1.2 per cent, according to the Britain-based research group Development Initiatives.

Under a separate "Charter for Change", 18 international charities so far, including Christian Aid and Islamic Relief Worldwide, have agreed to put into practice by May 2018 eight commitments to boost the role of national agencies.

They include passing 20 per cent of humanitarian funding down to that level.

On top of channelling more funding to local players, UN agencies and large international NGOs should also focus on "enabling" smaller, local organisations to respond in disaster situations, the ODI report said.

Shared responsibilities

Major government donors, including Britain, have shown interest in expanding the work done by local NGOs, but regulations and anti-terror laws often restrict who they can fund.

The UN chief Ban Ki-moon has said world leaders must change the way they handle humanitarian crises, which are taking an unprecedented toll on civilians.

The UN office for the coordination of humanitarian affairs estimates that 88.7 million people are in need of humanitarian assistance in 2016, which will cost an estimated $20.1 billion.

"The scale of humanitarian needs at this time is just extraordinary and we must accept our shared responsibilities,"  he said in February.

Additional reporting by Reuters.