According to the report, the world produces about four billion metric tonnes of food a year but 1.2 to 2 billion tonnes is not eaten. The report said that between 30% and 50% of the four billion tonnes of food produced around the world each year went to waste.
"This level of wastage is a tragedy that cannot continue if we are to succeed in the challenge of sustainably meeting our future food demands."
"Thirty percent of what is harvested from the field never actually reaches the marketplace (primarily the supermarket) due to trimming, quality selection and failure to conform to purely cosmetic criteria," it said.
Of the food which does reach supermarket shelves, 30-50 percent of what is bought in developed countries is thrown away by customers, often due to poor understanding of "best before" and "use by" dates.
A "use by" date is when there is a health risk associated with using food after that date. A "best before" date is more about quality - when it expires it does not necessarily mean food is harmful but it may lose some flavour and texture.
However, many consumers do not know the difference between the labels and bin food after "best before" dates. Promotional offers and bulk discounts also encourage shoppers to buy large quantities in excess of their needs.
In developed countries, like Britain, efficient farming methods, transport and storage mean that most of the wastage occurs through retail and customer behaviour.
The report also established that about 10.2 billion pounds worth of food is thrown away from homes every year, with one billion pounds worth being perfectly edible, the report found. By contrast, in less developed countries, such as in sub-Saharan Africa or South East Asia, wastage mostly happens due to inefficient harvesting and poor handling and storage.
Dr Tim Fox, head of energy and environment at the Institution of Mechanical Engineers, said: "The amount of food wasted and lost around the world is staggering. This is food that could be used to feed the world's growing population - as well as those in hunger today.
"It is also an unnecessary waste of the land, water and energy resources that were used in the production, processing and distribution of this food.”
"The reasons for this situation range from poor engineering and agricultural practices, inadequate transport and storage infrastructure through to supermarkets demanding cosmetically perfect foodstuffs and encouraging consumers to overbuy through buy-one-get-one-free offers."
"This is food that could be used to feed the world's growing population - as well as those in hunger today," said Dr Tim Fox, head of energy and environment at the IME.
The United Nations predicts global population will peak at around 9.5 billion people by 2075, meaning there will be an additional 2.5 billion people to feed.
The rising population, together with improved nutrition and shifting diets will put pressure for increases in global food supply over the coming decades.
Rising food and commodity prices will drive the need to reduce waste, making the practice of discarding edible fruit and vegetables on cosmetic grounds less economically viable. However, governments should not wait for food pricing to trigger action on this wasteful practice, but produce policies that change consumer behaviour and dissuade retailers from operating in this way, the study said.
Rapidly developing countries like China and Brazil have developed infrastructure to transport crops, gain access to export markets and improve storage facilities but they need to avoid the mistakes made by developed nations and make sure they are efficient and well-maintained.
Poorer countries require significant investment to improve their infrastructure, the report said. For example, Ethiopia is considering developing a national network of grain storage facilities which is expected to cost at least $1 billion.
"This scale of investment will be required for multiple commodities and in numerous countries, and co-ordinated efforts are going to be essential," the report said.
The Institution of Mechanical Engineers review draws heavily on work carried out over a number of years for the Food and Agriculture Organisation of UN.
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