The number of 16 to 24-year-olds out of work was 952,000 in the three months to October, a quarterly rise of 6,000 and the highest figure since records began in 1992.
Total unemployment increased by 21,000 to 2.49 million, the highest level since early 1995, although the quarterly rise was the smallest for 18 months.
There was some good pre-Christmas news for the Government in today's figures, which showed the first fall in the number of people claiming jobseeker's allowance since February last year.
The total fell by 6,300 to 1.6 million, more than half a million higher than a year ago.
Other data from the Office for National Statistics showed that the number of people out of work for more than a year increased by 49,000 in the latest quarter to 620,000, the worst total since 1997.
Unemployment among 18 to 24-year-olds was 757,000, up by 26,000 from the three months to July, the highest since 1993.
The UK's unemployment rate has now reached a 13-year high of 7.9 per cent.
The number of people in work increased by 53,000 to almost 29 million, although the figure is 432,000 lower than a year ago.
There were 30 million jobs in the economy in September, down by 127,000 over the quarter and 649,000 fewer than a year ago.
The number of people classed as economically inactive, including those on long-term sickness or who have given up looking for a job, was 7.9 million, down by 1,000 over the three months but up by 96,000 compared to last year.
More than one in five working-age people are now economically inactive.
Average earnings increased by 1.5 per cent in the year to October, up by 0.1 per cent on the previous month.
The ONS also revealed today that public sector employment increased by 23,000 in the third quarter of the year to just over six million.
Employment in central government rose by 31,000, mainly because of growth in the NHS.
There were 432,000 job vacancies in the economy in the three months to November, up by 1,000 from the quarter to August but down from 124,000 from a year earlier.
Paul Kenny, general secretary of the GMB union, said: "It will be a bleak Christmas in the households of the unemployed and of those who have lost their jobs in this bankers' recession.
"It could have been a lot worse if there had not been a Labour Government in office to sustain the level of economic activity by public spending.
"The electorate will soon enough be faced with the choice of whether to reduce the deficit by going for growth and getting the unemployed back to work and paying taxes, or reducing it by slashing public spending and adding to unemployment."
Ministers welcomed the fall in the claimant count, saying the figures showed that policies to help people back to work were keeping unemployment much lower than in previous recessions.
Work and Pensions Secretary Yvette Cooper pledged to keep increasing help for the unemployed, saying: "It is encouraging that there are more people in jobs as we get near to Christmas, and also that so many more young people have been helped.
"Government action is keeping unemployment much lower than in previous recessions.
"But it is still tough for a lot of people and we still expect unemployment to increase again in the New Year. So we are determined to do more, supporting a total of 400,000 extra youth opportunities over the next 18 months."
Employment Minister Jim Knight said: "I am pleased to announce that a further 2,800 jobs will be created for unemployed young people - including youth workers, events managers, IT repairers, medical laboratory assistants and energy specialists. This brings the total number of Future Jobs Fund jobs created so far to 98,000.
"Government is working with the public, private and voluntary sectors to create these job opportunities as part of our Backing Young Britain campaign - helping young people get a foot on the career ladder and ensuring no one is written off."
Martina Milburn, chief executive of youth charity The Prince's Trust, said: "One in five young people desperately need our support to find a job. The Prince's Trust is working closely with the Government and partners in the public and private sector to prevent the unemployed becoming unemployable.
"We welcome the measures outlined by the Government yesterday, investing in more jobs, training and work experience for young people."
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