The Government has unveiled a £3.1 billion package of support for jobseekers after new figures showed unemployment has soared to its highest level since Labour came to power in 1997.
The number of people looking for work jumped by 177,000 in the three months to February to reach 2.1 million - the biggest quarterly rise since 1991 and the worst total since just before Labour won the general election in May 1997.
The number of people claiming jobseeker's allowance increased for the 13th month in a row in March, up by 73,700 to 1.46 million, the highest total since September 1997.
Chancellor Alistair Darling responded in his Budget by announcing plans to create or support 250,000 jobs as part of a package of measures to help jobseekers, particularly the young.
Around 150,000 of the new jobs will be created through a fund aimed at local authorities and third sector groups.
By next January, every 18 to 24-year-old approaching a year out of work will be guaranteed a new job, training or a paid work experience place.
Mr Darling said the Government was determined not to return to the days when a whole generation of young people found themselves "abandoned to a future on the scrapheap".
He announced that the Jobcentre Plus network would receive an additional £1.7 billion, on top of £1.3 billion previously announced so that "everyone" could receive high-quality support.
Work and Pensions Secretary James Purnell said it had been a "Budget for jobs", adding that £3.1 billion would be invested in helping jobseekers.
He revealed that 100,000 jobs would be set aside for young people in sectors including hospitality and caring, pledging: "These 250,000 jobs will be real opportunities, to give young people skills and the chance to experience the pride and purpose of work.
"We will focus on quality opportunities which will benefit young people, but also benefit Britain. We will not make the mistake of pushing people into dead-end schemes which have no purpose."
A raft of other gloomy figures from the Office for National Statistics (ONS) showed continuing cuts in manufacturing jobs, a record low number of vacancies and the lowest rise in average earnings since 1991.
Meanwhile, economic inactivity, including people on long-term sick leave, those taking early retirement or who have given up looking for work, remained at more than 20% of the workforce at 7.85 million.
The UK now has an unemployment rate of 6.7%, the highest since the summer of 1997, today's figures showed.
Job vacancies fell by 68,000 in the quarter to March to a record low of 462,000, while a record 270,000 people were made redundant in the three months to February.
The ONS also reported a fall in the number of people in work in the quarter to February, down by 126,000 to 29.27 million, the lowest since last autumn.
Private sector employment fell by 13,000 to 23.6 million in the final few months of last year, while the number of workers in the public sector increased by 15,000 to 5.78 million.
Long-term unemployment rose by 49,000 to 481,000 in the three months to February, compared with the quarter to November.
Unemployment among 18 to 24-year-olds was 631,000 in the latest quarter, up by 17,000 from the three months to November.
Theresa May, shadow work and pensions secretary, said: "Behind these statistics are the shattered lives of millions. Labour have reached another grim milestone with unemployment now higher than when they came to power.
"This Government is sleepwalking through this unemployment crisis, recklessly casting millions of people adrift. No amount of Labour spin can cover up the fact that this Government closed a job centre every week in 2008 while unemployment was rising."
David Kern, chief economist of the British Chambers of Commerce, said: "These figures confirm a worsening situation in the labour market and are consistent with our forecast that UK unemployment is set to peek at 3.2 million next year."
Graeme Leach, chief economist at the Institute of Directors (IoD) said the figures were "awful", adding: "The 177,000 increase stamps on any discussion of green shoots and suggests there will be no recovery this year."
The IoD said there was now a "big divide" opening up between the public and private sectors with pay and jobs falling in private firms but rising in the public sector.
TUC general secretary Brendan Barber said: "These are another set of grim figures. There are no green shoots here, and there will be no real recovery until unemployment starts coming down.
"Mass unemployment drains public finances, ruins lives and blights communities. Everything in today's budget must be designed to create or save jobs."
The TUC welcomed the Budget announcement but said the timescale was not urgent enough.
During clashes in the Commons, Tory leader David Cameron accused the Prime Minister of being unable to admit he had failed to end the cycle of "boom and bust" in the economy, adding that unemployment was increasing at the fastest ever pace.
Gordon Brown said there were nearly one million more young people in work or training since 1997.
He was challenged by Liberal Democrat leader Nick Clegg on how many jobs had been created. "Over the last few months you have come up with a shopping list of announcements about creating new jobs - 100,000 new jobs from capital projects, 500,000 people kept in work by paying employers, 400,000 new green jobs.
"Will you tell the 2.1 million people who are now jobless exactly how many of your new jobs have been created so far?"
Mr Brown replied: "We believe as a result of the action we have taken hundreds of thousands of jobs which could have been lost are not being lost."