The ranking is based on the perceived levels of corruption among public officials and politicians, as assessed by experts at ten independent institutions including the World Bank,Economist Intelligence Unit and World Economic Forum.
It scores countries on a scale of 0 to 10, where 0 is perceived to be highly corrupt and 10 indicates low levels of corruption.
Scoring 9.3, Denmark, New Zealand and Singapore head the chart, followed closely by Finland and Sweden at 9.2.
President for the British Chamber of Commerce in Denmark Mariano A. Davies said: "The Danish mentality is to a great extent permeated by a Scandinavian cultural heritage known as 'Jante Law', where modesty, punctuality and equality are important measuring tools in the Danish way of life.
"For this reason, few people become seriously rich and even fewer are seriously poor. This rule of life is never very far from the surface of Danish life.
"In a business context, this will mean that Danes celebrate promotion with sensitivity and do not like people who promote themselves bombastically and at the expense of others.
"There is a sense of watchdog mentality underlying the Danish way of life resulting in very clear 'dos and don’ts'”.
"Furthermore, from a business perspective, it can take a very long time (and therefore a local presence) to earn the trust of a company in a supplier role and this trust can be lost very quickly."
Unstable governments, often with a legacy of conflict, continue to dominate the bottom rungs of the CPI. Afghanistan and Myanmar share second to last place with a score of 1.4, with Somalia coming in last with a score of 1.1.
Hugo Chavez's Venezuela ranked 164, below countries such as Zimbabwe, Sierra Leone and the Democratic Republic of Congo. Responding to the survey the Venezuelan Ambassador to the UK and Ireland, Dr Samuel Moncada, called the Corruption Perception Index "hot air and propaganda".
Speaking on BBC's Newsnight programme he said: "Rich countries play an integral part in the corruption of the poor countries when we talk about drug money, banks, the financial crisis.
"Private banks received millions of pounds of public money and nobody in the rich countries calls that corruption. If that happened in Venezuela we would have been called the most corrupt country in the world."
The 2010 CPI shows that nearly three quarters of the 178 countries in the index score below five, indicating a serious corruption problem.
Chair of Transparency International, Huguette Labelle, said: "These results signal that significantly greater efforts must go into strengthening governance across the globe.
"With the livelihoods of so many at stake, governments’ commitments to anti-corruption, transparency and accountability must speak through their actions.
"Good governance is an essential part of the solution to the global policy challenges governments face today.”
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