The United States, Britain and other European countries were criticised in a report by Amnesty International for violations such as advocating torture, imprisoning thousands of people without charge and eroding the rule of law in the fight against terrorism.
The London-based human rights group also rounded on China, Russia, Sudan and Colombia in its annual report on the state of the world's human rights.
In total, 150 countries came under scrutiny, with Amnesty highlighting their failings over 2005 and making recommendations for improvements this year.
"Governments collectively and individually paralysed international institutions and squandered public resources in pursuit of national security interests," said Amnesty's secretary general, Irene Khan.
They also "sacrificed principles in the name of the 'war on terror' and turned a blind eye to massive human rights violations," she said, in comments to mark the launch of Amnesty International Report 2006.
The trail of death in Iraq, the plight of 14,000 people detained without trial by the US, the suffering of Palestinians and Israelis and the atrocities in Darfur were a few of the human rights abuses cited by Amnesty.
And growing evidence has emerged of a secret prison partnership between Western and Middle Eastern countries as part of the "war on terrorism," resulting in widespread human rights abuses, the organisation said.
"There was increasing information to indicate that individuals suspected of terrorism by the US authorities have been secretly and forcibly transferred to others countries, including Egypt, Morocco, Jordan and Syria, for interrogation," it said.
The group said most transfers -- though the exact number of detainees being held is unknown -- were made to countries "whose security services had long records of torturing detainees with impunity."
It added that Britain had signed agreements with Lebanon, Libya and Jordan, noting a "further sign of close collaboration... under which they agreed to accept individuals whom the UK authorities wished forcibly to expel."
Nations across Asia also used terrorism to justify curtailing human rights last year, said Amnesty, from secret court hearings in China to detention without trial in Australia.
And King Gyanendra's absolute rule over Nepal for much of last year led to a surge in human rights violations including killings and torture.
Despite such misery, Ms Khan said she saw good reason for optimism.
"What is different about 2005 compared to past years is that the public mood is changing, thanks to the work of human rights advocates and others, which is putting the US and European governments on the defensive," she wrote in the opening chapter of Amnesty's 319-page report.
"People are no longer willing to buy the fallacious argument that reducing our liberty will increase our security," she said.
Britain's Prime Minister Tony Blair warned "the rules of the game are changing" following the July 7, 2005, London bombings in which four suicide bombers killed 52 people and injured hundreds more.
As a result, his government unveiled measures that restricted human rights in return for greater security, giving more power to the police to detain terror suspects for longer and banning people from glorifying terrorism.
But parliament rejected some of the more drastic elements, while the courts ruled in December that evidence obtained under torture abroad could not be used in British courts.
"Lines, however fragile, are being drawn. Voices are being raised. This offers hope for a turning point in the debate and a more principled approach to human rights and security in the future," Ms Khan wrote.
US President George W Bush also met opposition to his administration's claim that it was exempt because of its fight against terrorism from a prohibition against torture and ill-treatment, Amnesty said.
Amnesty was also optimistic about reforms at the United Nations, noting that member states agreed to double the budget of the Office of the UN High Commissioner for Human Rights and work harder to protect human rights.
At the same time, disappointment and failed promises by governments to follow up pledges to support human rights with action continued to threaten progress, Amnesty said, accusing powerful leaders of turning a blind eye to suffering in certain countries in return for economic or political gains.
The Group of Eight (G8) leading industrial countries, for example, pledged in 2005 to help eradicate poverty in Africa, while at the same time continuing to be major arms suppliers to African governments, according to Amnesty.
Ms Khan acknowledged the challenges ahead, but insisted: "The events of 2005 show that the political and moral authority of governments will be judged more and more by their stand on human rights at home and abroad.
"Therein lies one of the more important achievements of the human rights movement in recent times."
Australia has also come under fire, with the report saying issues like the policy of sending asylum seekers offshore, violence against women in indigenous communities and the government's failure to stand up for Guantanamo detainee David Hicks undermine the country's credibility.
And Australians' lives were being placed in jeopardy by the government's failure to take a "consistent and principled position" on the death penalty.