The Prime Minister was accused of "betraying" a generation of youngsters after latest figures showed that the youth unemployment rate was now 20.5%, following a 66,000 increase to 965,000 in the last quarter of 2010, the highest figures since records began in 1992.
The Prince's Trust said there were enough unemployed young people to fill every football stadium in the Premier League, with almost 200,000 left queuing outside.
The number of people claiming Jobseeker's Allowance increased by 2,400 in January to 1.46 million, with female claimants rising for the seventh month in a row to reach almost 450,000, the highest figure since 1996.
Meanwhile, more than a million people were working part-time because they could not find full-time jobs, the highest total since records began in 1992.
At Prime Minister's question time in the Commons, Labour leader Ed Miliband accused David Cameron of "betraying a whole generation of young people" by scrapping the previous administration's Future Jobs Fund and allowing youth unemployment to rise.
The Prime Minister said the latest figures were a "matter of great regret" but stressed that youth unemployment had been a long-term problem, and that the Government was taking action to improve education and back-to-work schemes.
"Of course today's unemployment figures are a matter of great regret, and it's a great regret particularly in terms of higher youth unemployment."
But, he added: "Youth unemployment has been a problem in this country for well over a decade, in good years and in bad.
"The level of youth unemployment went up by 40% under the last government, an extra 270,000 young people unemployed. What we have to do is sort out all of the things that help young people get back into work."
Work and Pensions Minister Chris Grayling said it had been a "difficult" few months in the labour market but added that things seemed to be "stabilising", pointing to a rise in the number of vacancies.
"The challenge for us now is to push ahead with our welfare reforms as quickly as possible so we start to move more people off benefits to take advantage of those vacancies."
The Government said its new Work Programme was gaining momentum, with more than 170 tenders submitted from 30 organisations from private, public and voluntary sector organisations.
TUC general secretary Brendan Barber said: "Young people were hit hardest by the recession and today's figures show they are suffering in our so-called recovery too.
"Government action so far - trebling tuition fees, scrapping the Education Maintenance Allowance and vital job support - has only made things worse for young people."
David Kern, chief economist at the British Chambers of Commerce, said: "It is particularly worrying that the number of people who are working part-time because they could not find a full-time job, and the number of young unemployed, both rose to the highest level since records began.
"The figures confirm that the economy is facing serious challenges over the months ahead, and we believe that UK unemployment will rise by a further 100,000 over the next year to around 2.6 million. With private sector employment likely to decline, it is critical that every effort is made to enable businesses to create jobs."
Vicky Redwood, senior UK economist at Capital Economics, said the figures provided further evidence that the jobs recovery had "gone into reverse", predicting that unemployment would climb towards three million over the next few years.
Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said: "Further evidence of fewer people in work, higher unemployment and more people becoming economically inactive is a clear sign that the jobs situation was continuing to weaken toward the end of 2010, well before the impact of the coalition Government's spending cuts and tax rises start to take full effect."
Ian Brinkley of The Work Foundation said: "This mini-recession in the labour market as a whole is turning into a major crisis for young people."
Almost 100,000 people gave up looking for work during the last three months of 2010, according to analysis by the Institute for Public Policy Research.
The number of people classed as economically inactive rose by 93,000 over the latest quarter to 9.36 million, a rate of 23.4%, including 1.57 million who retired before the age of 65, the highest figure since records began in 1993.
There was a 68,000 fall in employment, down to 29.12 million, according to the data from the Office for National Statistics.
Public sector employment fell by 33,000 to six million in the quarter to September, while the number of people in private firms was unchanged at 23.1 million.
The number of jobs fell by 170,000 in the year to last September to 30 million.
Long-term unemployment is getting worse, with an increase of 17,000 in the number of people out of work for more than a year, to 833,000.
Average earnings increased by 1.8% in the year to December, down by 0.3% on the previous month, giving average weekly pay of £430.
Unemployment in the regions between October and December was:
North East 129,000 plus 13,000 10.2%
North West 258,000 minus 19,000 7.5%
Yorkshire/Humber 244,000 plus 8,000 9.3%
East Midlands 185,000 plus 3,000 8.0%
West Midlands 261,000 plus 28,000 9.8%
East 198,000 minus 1,000 6.6%
London 373,000 minus 1,000 9.0%
South East 273,000 minus 5,000 6.1%
South West 165,000 plus 17,000 6.1%
Wales 123,000 plus 5,000 8.4%
Scotland 216,000 minus 13,000 8.0%
N Ireland 68,000 plus 9,000 8.0%
Comments