Britain's unemployment rate unexpectedly climbed to 7.2 per cent in the fourth quarter bolstering the Bank of England's pledge to keep rates on hold at a record low 0.5 per cent.
However, the number of people out of work fell by 125,000 to 2.34 million in the three months to December, the Office for National Statistics said.
Economists had expected unemployment to stay unchanged at 7.1 per cent.
The ONS also said the number of people claiming Jobseeker's Allowance fell by 27,600 to 1.22 million in January- the 15th consecutive drop.
Prime Minister David Cameron tweeted: "It's good to see another fall in unemployment. Our Long Term Economic Plan means more people with the security of a wage and a chance in life."
Chief Secretary to the Treasury Danny Alexander said: "Quarter by quarter, job by job, we are rebuilding Britain's economy. Every job created is a family helped and a boost to our economic growth."
The number of people in part-time jobs who want full-time posts fell by 29,000 to 1.4 million but still 46,000 higher than a year ago. More women are working than at any time since records began in 1971 with more than 14 million in employment.
TUC general secretary Frances O'Grady said: "These are encouraging figures for the millions of people desperate for work. It is good news that unemployment levels continue to fall, and that young people are finally beginning to share in the improving jobs market.
"But people already in work have less to cheer about, with prices still rising twice as fast as wages. While we have a record proportion of women in employment, the widening gender pay gap means many women are not getting the fair pay they deserve."
Dave Prentis, general secretary of Unison, said the total fall in unemployment masked "the scourge of under-employment".
He added: "Too many people are stuck in minimum-wage jobs, on zero-hours contracts and part-time work when they are desperate to go full-time."
Average weekly earnings increased 1.1 per cent in the year to December, but that is below the annual inflation rate of 1.9 per cent in January.
Job vacancies were up by 28,000 to 580,000, the highest since 2008, signalling demand for staff has kept a positive momentum.
The figures come a week after the Bank was forced to overhaul its forward guidance policy after six months, dropping the 7 per cent unemployment target for a vaguer output gap rate rise trigger.
Understanding the figures:
The ONS reported the unemployment rate in the quarter to December stood at 7.2 per cent with 2.34 million people out of work, falling from 7.6 per cent in July to September.
But the 7.2 per cent rate is higher than the 7.1 per cent figure for the three months to November, when employment rose at a record rate of 280,000 and unemployment stood at 2.32 million
What’s going on? Employment rose more slowly in December, bringing the quarterly increase down to 193,000. That, along with a 20,000 rise in unemployment, was enough to push the jobless rate up to 7.2 per cent.
This is confusing but an awkward byproduct of the way the ONS produces labour market data, comparing the latest three months with the previous three months.
Nick Palmer, senior labour market statistician at ONS said: "The main conclusion that should be drawn from these latest figures is that the rate at which unemployment has been falling is likely to have slowed down."