UK unemployment rose by 48,000 to 2.67 million in the three months to December, official figures have shown.
The unemployment rate was 8.4%, the Office for National Statistics said, the highest for 16 years.
The number of young people without a job rose 22,000 to 1.04m, taking the unemployment rate for 16- to 24-year-olds to 22.2%.
The number of people claiming Jobseeker’s Allowance in January increased by 6,900 to 1.6 million.
While the unemployment rate is now at its highest since 1995, the number of job vacancies rose to 476,000 in the three months to January.
Lord Freud, a work and pensions minister, told BBC News: “This clearly shows we are by no means out of the woods yet.”
“But it is quite a mixed picture. There are signs of stability. The inactivity level is coming down,” he said.
Labour’s shadow work and pensions secretary, Liam Byrne, said it was clear government policy was not working.
“Today’s figures make for grim reading for the millions of squeezed families desperate for good news on the economy.
“With unemployment at its highest rate since 1995 and long term youth unemployment doubling in the last year, ministers must now get a grip,” he said.