Official figures show that the jobless total leapt by 164,000 between June and the end of August. The higher-than-expected increase – of 0.5 percentage points to 5.7 per cent – is the biggest since 1991 and the eighth successive monthly rise.
It leaves the number out of work higher than at any point since March 1998, when it stood at 1.8 million, and has prompted further fears that unemployment will break 2 million by Christmas.
The figures come shortly after yet more statistics disclosed the intense pressure on families being caused by the economic downturn.
Inflation has hit a 16-year high of 5.2 per cent, meaning further rises in the cost of living, while the number and value of mortgages being given are at their lowest levels since recent records began.
The situation is set to become much worse if the British economy – which has already stopped growing – enters recession, as most economists believe it will.
In anticipation of the sharp rise in jobless numbers, the Government has made available an extra £100 million for re-training workers set to be made redundant due to the downturn.
James Purnell, the Work and Pensions Secretary, said: "These are uncertain times and the clear message I want to send to people is that there is help out there if the worst happens and they find themselves unemployed."
Brendan Barber, the general secretary of the TUC, said: "There can be no assumption that the people who are losing their jobs will find it easy to get new ones, and they will need all the help they can get with redundancy pay, re-training and personal advice."
Mr Barber added that plans to cut 12,000 jobs from Mr Purnell’s department should be urgently reversed, as current staffing levels are already inadequate to cope with rising unemployment.
The number out of work rose by 81,000 to 1.72 million between May and July, taking the official unemployment rate up from 5.3 per cent to 5.5 per cent.
Some economists, including David Blanchflower, a labour economist on the Bank of England’s interest-rate setting committee, have predicted that by Christmas, unemployment could break the 2 million barrier for the first time since July 1997. The Telegraph