This weekend marks the fifth anniversary of the outbreak

The crisis cost an estimated �8bn to the economy and almost 6.5 million animals were slaughtered.

The Centre for Rural Economy (CRE) said household incomes in remote rural areas lagged behind the national average.

But the government said it spent �200m a year on rural development and many communities were thriving.

The CRE said average weekly salaries in rural areas were more than 13% lower than the national average.

Five years down the line, are we better off? No, we haven't recovered Liz Skelton Cumbrian businesswoman

The worst affected counties were Cumbria and Devon, the Newcastle University-based organisation said.

The report claimed the government response to the foot-and-mouth crisis had been too heavily oriented towards the farming industry.

And Tony Blair's plea for people to stay out of the countryside to avoid spreading the disease damaged vital rural industries like tourism.

Professor Neil Ward, director of the CRE, said this "panic response" turned an animal disease problem into a rural economy crisis.

"One of the biggest mistakes was to discourage people from visiting the countryside in the early days of the outbreak.

The 2001 outbreak cost the taxpayer �8bn

"So a lot of economic losses were suffered by pubs, shops and visitor attractions, and all those other businesses that make up the vast majority of economic activity in rural areas.

"The farmers got about �1.3bn for their livestock losses but those other types of businesses received very little really."

The plan to set up a new government department to handle rural affairs led to the creation of Defra, but its huge remit meant the countryside was marginalised due to other responsibilities like climate change, Mr Ward added.

Liz Skelton, who ran an open farm as a tourist attraction in Cumbria prior to the outbreak, told the BBC she had been badly affected by foot-and-mouth, but had not received any compensation because her business was not classified as a farm.

"Five years down the line, are we better off? No, we haven't recovered," she said.

Tourism is crucial to the rural economy

"We had no help at all. We read in the local newspaper week-on-week that there was hundreds of thousands of pounds to come to Cumbria to assist in regeneration. Did I get any? Not a penny.

"I am just one very small businessperson that has drastically lost out. There are so many of us. And nobody seems to care."

Ron Abelwhite, whose Penrith-based business, Wetherights Pottery, did receive a grant, said: "I believe there was a lot of feedback that went through and eventually they got some of the message and business that were rurally based were able to apply for grants.

"I think you had to be in a position to put a very good case forward to show that you could come together with a substantial business that was able to prosper just the other side of the devastation.

"Those that saw it as an opportunity to develop their businesses have been able to strike out and advance and those that threw up their hands in horror and said I can't cope with this, I'm afraid went the wrong way."

'Low pay'

Rural Affairs Minister Jim Knight conceded that farmers received �1.34bn in compensation for livestock losses, while only �39m was given to the business recovery fund aimed at rural businesses that suffered losses.

But he said these figures did not take into account the �200m being spent annually on rural development.

Rural areas enjoyed lower unemployment, higher overall incomes and better quality of life than urban areas, he said.

However he acknowledged there were concerns to address.

"There are real problems facing many rural communities - most particularly the lack of affordable housing and low pay - and it is important that we do not shy away from tackling these issues."

And he rejected suggestions that rural affairs had suffered by being included in Defra, saying it made "absolute sense" for a single department to deal with all rural issues.

"We have already made significant progress in supporting rural communities, including helping village shops and post offices stay open."