Almost a third of the working age population in London are jobless, costing billions of pounds a year, research showed today.
Worklessness in the capital costs more than £5 billion a year, including welfare benefit and employment programmes, a study by London Councils found.
The group, which represents 33 councils in the capital, said national employment programmes are "under-performing" in London, adding that boroughs are better placed to deliver job-related services.
Around 2,000 more jobs would have been created in London if national programmes were as effective as in other parts of the country, it was claimed.
Stuart Fraser of London Councils said: "National employment programmes are less effective in London than elsewhere in the country.
"This is a serious issue when you consider that almost a third of the working age population are unemployed and the costs of worklessness are so high in London.
"Boroughs are already in contact with people who are out of work, and given more opportunity from Whitehall, councils can provide unemployed people with a whole package of support which is individually tailored to their training, childcare and housing or health issues."
A Department for Work and Pensions spokesman said: "Unemployment is half a million lower than expected last year, however we will not cut back on support for jobs.
"In fact, we have invested £5 billion to help people back to work, part of which has created around 7,500 jobs in London for young people.
"Of the 1.2 million economically inactive in London, just over 400,000 are students. The numbers also include people looking after their families, carers and people who have retired early."
Shadow minister for London Justine Greening said: "This report is a damning indictment of Labour's failure in London and yet Alistair Darling still plans to go ahead with the rise in National Insurance, a tax on jobs."
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies