The number of people out of work has hit the highest level for 14 years at 2.47 million, according to official figures.
Unemployment jumped by 210,000 in the three months to July – broadly in line with increases in recent months but below May’s peak of 281,000. The jobless rate now stands at 7.9%.
Meanwhile, claims for unemployment benefit also rose to the highest level for more than 12 years during August, up 24,400 from July to 1.61 million.
Howard Archer, an economist at IHS Global Insight, says: “While the deepest job losses are now probably over, the outlook for the labour market remains far from encouraging even though the economy looks like returning to growth in the third quarter."
However, unemployment is likely to continue to rise, albeit at a slower rate, as businesses suffer the aftermath of the sharp economic contraction between the April 2008 and April 2009.
“Unemployment still seems likely to reach three million in 2010 or early 2011 and there remains a very real danger that it could rise even further,” Archer adds.
Meanwhile, the annual rate of pay growth continued to fall. Average earnings growth including bonuses eased to 1.7% in the three months to July from 2.5% in the three months to June.
Mervyn King, the governor of the Bank of England, this week told the Treasury Select Committee that the UK economy is emerging from the woods - but added that it will take a long time for it to fully recover.
He said there are now signs growth has resumed in the third quarter, but the strength and the sustainability of the recovery remains "highly uncertain".
Vicky Redwood, UK economist at Capital Economics, says: “As Mervyn King highlighted, even if the recession is technically over, it will continue to feel like one for many people for a long time yet.”