Austria's capital Vienna gives its residents the best quality of life of any city in the world and Baghdad is the worst, according to the latest global survey.
The survey conduced by consultant group Mercer found that Sydney was the highest rated Australian city, coming in an equal 10th with Bern, Switzerland.
Melbourne, regularly ranked by some surveys as the world's most liveable city, could only manage 17 place.
Other capitals such as Perth ranked 21, Canberra ranked 26, Adelaide came 29 and Brisbane ranked 37, further down the rankings.
According to the Sydney Morning Herald, Vienna with 1.7 million residents came top of the survey for the fourth year in a row, boasting of a vibrant cultural scene alongside comprehensive health care and moderate but rising housing costs.
Its opulent architecture from the time of the Habsburg empire makes it a tourist magnet.
"The city is so international... I have been waiting for buses and heard over 10 languages being spoken at one stop," American Dawn Gartlehner, 42, a law firm manager who has lived in Vienna for more than 15 years said.
"The city caters to all kinds of people, all ages and all walks of life. You can have a wonderful day here spending all the money in your bank account but have an equally great time spending nothing at all," he added.
According to the report, Mercer conducts its annual survey to help companies and organisations set compensation for staff on international assignments.
It uses 39 factors such as political stability, health care, education, crime, recreation and transport.
Despite its sovereign debt crisis, Europe has 15 of the world's top 25 cities in the 2012 survey. Germany and Switzerland each have three in the top 10.
The lowest-ranking city in western Europe was Athens, gripped by deep economic woes.
Canadian cities dominated rankings in the Americas region, with Vancouver at number five retaining the top spot and Honolulu at 28 the most pleasant US urban centre.
New Zealand's Auckland at number three is still atop the Asia Pacific region's charts, while Dubai at 73 gets best marks in the Middle East and Africa.
But that region also has 15 cities in the bottom 20, including Lagos, Nigeria; Bamako, Mali; Khartoum, Sudan; and N'Djamena, Chad.
Iraq's capital Baghdad was ranked lowest in the world.
The top 10 cities for quality of life are as follows:
1 VIENNA, AUSTRIA
2 ZURICH, SWITZERLAND
3 AUCKLAND, NEW ZEALAND
4 MUNICH, GERMANY
5 VANCOUVER, CANADA
6 DUESSELDORF, GERMANY
7 FRANKFURT, GERMANY
8 GENEVA, SWITZERLAND
9 COPENHAGEN, DENMARK
10 EQUAL 10TH: SYDNEY, AUSTRALIA AND BERN, SWITZERLAND
Bottom 10 countries providing worst quality of life:
212 KINSHASA, DEMOCRATIC REP. OF THE CONGO
213 NOUAKCHOTT, MAURITANIA
214 TBILISI, GEORGIA
215 BRAZZAVILLE, CONGO
216 SANA'A, YEMEN
217 KHARTOUM, SUDAN
218 N'DJAMENA, CHAD
219 PORT-AU-PRINCE, HAITI
220 BANGUI, CENTRAL AFRICAN REPUBLIC
221 BAGHDAD, IRAQ.(ANI)