UK unemployment rose by 118,000 in the three months to November to 2.7 million.
The unemployment rate also rose to 8.4% from 8.3% - the highest rate since January 1996, according to figures from the Office of National Statistics.
The number of people claiming Jobseeker's Allowance in December rose by 1,200 to 1.6 million – a smaller rise than expected and November's figure has also been revised down by 200.
"Inflation may be coming down, and the Bank of England is breathing a little more easily, but on the high street it's as bleak as ever," says Nick O'Reilly, a business recovery specialist at chartered accountants HW Fisher & Company.
"The Christmas period saw several high profile retail names go to the wall, and now public sector redundancies are progressively kicking in."
The latest unemployment statistics also showed a bleak picture for the younger generation. The number of young people without a job rose to just over one million in the three months to November, taking the unemployment rate in the 16 – 24 year-old age group to 22.3%.
To add to the gloom, the number of Brits who are ‘under-employed' - working part-time because they cannot find full-time work - has jumped by 44,000 in the quarter to hit 1.3 million, the highest figure since records began in 1992.