Unemployment jumped by 45,000 to its worst level for six years, even though more people are in work, new figures reveal.
A total of 1.7 million people were out of work in the three months to August, a quarter of a million more than a year ago.
The annual increase was the highest since 2000, giving an unemployment rate of 5.5%, up 0.1% on the previous three months.
The number of unemployed people claiming Jobseekers' Allowance increased by 10,200 in September to 962,000 - or 3% of the UK workforce.
However, other figures revealed by the Office for National Statistics showed that the number of people in work lifted 120,000 on the previous three months to an all-time high of 29.01 million.
The number of economically inactive people fell by 64,000 during the quarter to 7.78 million.
Meanwhile, average earnings including bonuses increased by 4.2%, although that was down 0.2% on the July rate.
The Government's minister for employment and welfare reform, Jim Murphy, said that numbers of those classed as "economically inactive" had fallen by 64,000 this quarter and by 154,000 this year.
This fall is thought to be explained in part by moves to encourage people off work due to long-term illness or disability to look for a job.
Separate figures published by the Department for Work and Pensions in August showed that the number of people claiming incapacity benefits fell by 52,000 to 2.71 million in the year to February 2006.
