The criticism was made in a study commissioned by the BBC's governing body, the BBC Trust, which includes an independent assessment by Professor Anthony King and research from Cardiff University and the market research analysts BMRB.
The report says licence fee payers outside of London are getting a second-class service because news bulletins such as 'News at Six' and the 'Ten O'Clock News' do not provide sufficient coverage of events in Wales, Scotland and Northern Ireland.
Sir Michael Lyons, chairman of the BBC Trust, said: "The resounding message from this review is the BBC is falling short of its own high standards and is not meeting properly its core purpose of helping to inform democracy.
"The problem is not about impartiality, but about clarity, precision and the balance of reporting from around the UK. The good news is that the public have told us that they want to learn about other parts of the UK.
"From now on, those watching or listening to BBC News should consistently be able to learn not just what's happening, but whether it's unique to where they live, and how it compares to what might be happening elsewhere in the UK."
The BMRB research shows that 82% of the UK population are interested in news about other parts of the UK, while 62% think it important to understand the different politics and policies within each nation.
On a positive note, the report said BBC network coverage of politics and policy across the UK is impartial.
But, the BMRB research also revealed that 37% of people believe that BBC reports are often not relevant to where they live.
Analysis of BBC network news and current affairs programmes over a four-week period in 2007 by Cardiff University found 19% of stories involving or relating to devolution were vague and confusing, while of 136 stories about health and education, all dealt with England alone.
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