Almost 165,000 people lost their jobs in the three months from November to January, with the rate of unemployment rising 6.5% over the period.

The rate has led David Kern, chief economist at the British Chamber of Commerce, to say that the government should consider temporary wage subsidies.

He said: "Even with some staff accepting pay freezes and working fewer hours, it is clear that employers are facing significant financial pressures.

"There is a vital need for steps specifically aimed at preventing a damaging loss in our industrial skills base. Temporary measures, such as wage subsidies, need to be seriously considered."

TUC general secretary Brendan Barber called the news "another grim milestone in the return of mass unemployment to the UK", predicting it would get worse before it gets better.

He said: "This unemployment has not just been made in Britain, and requires an international response. It is beginning to look like the G20 summit may not agree the co-ordinated boost to the world economy called for by Barack Obama and Gordon Brown.

"International summits may seem a long way from the dole queues, but without such a stimulus, unemployment will go higher and last longer. We need to put every pressure on world leaders to work together to fight the recession."

Also see:
Long term unemployment grows in print industry
Unemployment soars at fastest rate for 17 years
Manufacturing jobs at lowest ebb since records began