UK unemployment has risen for the eighth month in a row to reach 2.67 million.
New figures from the Office for National Statistics show the number of people out of work increased by 48,000 in the three months to December.
It takes the jobless rate to 8.4%.
It includes a 22,000 increase in youth unemployment , taking the number of 16 to 24 year-olds out of work to 1.04 million.
The number of people claiming Jobseeker's Allowance rose by 6,900 in January, the eleventh successive monthly increase.
This takes the of claimant count of unemployed people up to 1.6 million.
The number of women claiming the allowance increased by 1,500 last month to 531,700, the highest figure since the summer of 1995.
It has been three years since unemployment broke through the two million mark, with Wednesday's figures prompting more calls for Government action.
Members of the Right to Work campaign group staged a protest outside Department for Work and Pensions offices in Whitehall to mark the release of the latest unemployment figures.
The 48,000 increase in unemployment was the smallest quarterly rise since last
summer and less than forecast.
John Philipott, chief economist of the Chartered Institute of Personnel and Development (CIPD) told Sky News that while the figures for the final three months of 2011 were not as bad as expected, 2012 was going to be a tough year.
He said: "The problem for 2012 is that most analysts, including ourselves, expect the economy to grow very slowly at best and that will inevitably lead to rising unemployment.
"One hopes it won't rise to the three million level but something short of that is probably likely."
A recent study by the CIPD showed that job prospects are set to worsen in the coming months as more firms make workers redundant.
UK GDP shrank by 0.2% in the last three months of 2011, raising fears of another recession if growth contracts again in the coming quarter.
The Government said Wednesday's figures showed that despite continuing economic challenges, the labour market was stabilising.
The minister for welfare reform Lord Freud said: "The latest figures show some
encouraging signs of stability despite the challenging economic climate.
"With more people in employment and a rise in vacancies, it is clear the
private sector is still creating jobs.
"However, we are not complacent. With more people in the labour market we know
that competition for those jobs is tough and we will continue to make it our
priority to find people work."
The latest ONS data also shows that employment rose by 60,000 in the final quarter of 2011 to 29 million, inflated by increased part-time jobs.
A record number of people are working part-time because they cannot find full-time jobs.
Earlier in the week the TUC calculated that unemployment could be as high as 6.3 million in the UK if a different counting measure was used, highlighting the "true scale" of joblessness.
Labour shadow work and pensions secretary Liam Byrne said: "This Government is creating a jobless generation, with more young people out of work than ever before.
"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.
"It is painfully clear that the Government's welfare to work programmes are not doing the job and the time for dithering is over - complacent ministers must act now before a generation is left scarred by their failure."
Wednesday's ONS data also showed UK average earnings increased by 2.0% in the year to December, unchanged from the previous month.
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