Unemployment has surged to an 11-year high as the recession tightens its grip on Britain, after the number of people out of work grew by 140,000 to 1.82 million.

Official figures showed today that unemployment during the three months to September rose to the highest levels since the end of 1997.

The number of people claiming jobseekers allowance also rose, up by 36,500 to 980,900 last month, the Office for National Statistics said.

The rise in claimants was slightly less than analysts had expected, but was still the ninth successive increase and the biggest monthly jump in 16 years. Economists now forecast that the total will soar to more than one million next month.

Total employment fell by 99,000 in the three months to September, although the overall rate stayed at 74.4 per cent. Job vacancies continue to shrink as companies cut back on recruitment, with the the number of new jobs falling by 40,000 to 589,000.

The grim figures came just a day after a raft of household names announced massive job cuts, with more than 4,200 positions set to go in the UK alone. Virgin Media, Psion, GlaxoSmithkline and Taylor Wimpey all said they would be axing British staff, with Vodafone expected to announce job cuts imminently.

Tony McNulty, Minister for Employment said: “Every time a worker loses their job it is a personal tragedy and the Government is doing everything it can to get those people who have become unemployed back to work as quickly as possible.

"People who are worried about the current downturn need to know that there are jobs out there – the claimant count may be rising, but large numbers of people are also moving off benefits and into jobs."

Mr McNulty announced that funding for Jobcentre Plus' Rapid Response Service would be doubled from £3 million to £6 million. He refused to speculate on a "worst case scenario" of unemployment figures but admitted "we are not at the bottom of the downturn".

Mel Groves, Chief Executive of Jobcentre Plus, said that they were "coping" with an increase in new jobseekers allowance claims, which have risen from 45,000 a week in the spring to 63,000 last week.

Analysts said that more job losses were likely, and that pressure was now mounting on the Bank of England to make further rate cuts to try and boost the flagging economy, which is already widely believed to be in recession.

Vicky Redwood, of Capital Economics, the economic consultancy, said: "Much worse is to come – we expect unemployment to peak in 2010 at around 3.3 million. The rapid deterioration in the labour market highlights the need for interest rates to fall much further."

John Philpott, Chief Economist at the Chartered Institute of Personnel and Development (CIPD) said: “These figures, which take unemployment to an 11 year high will sadly be followed by further bad news in the coming months."

The Bank of England has said that the country is set for an 18-month long recession, heaping more pressure on firms to cut jobs as demand dwindles.

Unemployment among 18 to 24-year-olds rose to a 13-year high, with 579,000 out of work, while long term unemployment has also increased. The number of people out of work for longer than a year rose by 20,000 to 435,000.

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