The global financial crisis is having a devastating impact on families in emerging Europe and Central Asia, with the risk of the region giving back a fifth of the poverty reduction gains of the past decade, according to a new World Bank report released on Wednesday.

By 2010, there could be over 10 million more poor people in the region, and close to an additional 25 million more who were almos t middle class but now just above the poverty line (relative to pre-crisis projections) with the potential of losing their homes, jobs, and basic services, said the World Bank.

The new report, The Crisis Hits Home -- Stress-Testing Households in Europe and Central Asia, takes a unique look at the impacts of the global financial crisis at the household level in this region. According to the report, families are being hit by credit market shocks, the increasing prices of goods and services, and rising unemployment.

The global financial crisis risks reversing the substantial gains and improvements in living standards achieved by the Europe and Central Asia region over the last few years, said Luca Barbone, Director for Poverty Reduction and Economic Management in the World Bank's Europe and Central Asia Region.

"One of the tragic impacts of the crisis has been that the middle income countries that had turned the corner are the ones hardest hit. Across countries in the region, unemployment levels have risen while economic activities have collapsed. Poverty will rise. Families are being stretched to the limit," he said.

According to the report, stress tests recently conducted by the World Bank on household loans show that ongoing macroeconomic shocks to interest rates, exchange rates, and household income may increase the numbers of families that are unable to pay back their debt.

For example, up to 20 percent more families with mortgages and other loans in Lithuania and Hungary could be at risk of defaulting on their loans.