George Osborne has been given a considerable boost ahead of his budget speech after official figures revealed that the UK's employment rate climbed to a new record high of 73.3%.
The Office for National Statistics (ONS) said the figure for the three months to January was up from 72.1% for a year earlier.
The research body also found that the UK's unemployment rate dropped to 5.7% over the same period, down from 7.2% at the start of 2014.
The business secretary Vince Cable claimed that the data was a "historic moment" for the British economy.
"With almost three quarters of working age people now in work, we have achieved the highest rate of employment in the UK since records began," the Liberal Democrat MP said.
"This is a sign that the long term decisions the Liberal Democrats have taken in government have created a more resilient economy.
"But we have also created a fairer economy with everyone sharing in the fruits of our recovery: more people, especially women, in full-time jobs and more young people in work.
"Everyone now has the opportunity to get on in life and achieve their full potential."
But the ONS also said that the UK's youth unemployment rate (for 16 to 24-year-olds) was significantly higher than the total jobless rate at 16.2%.
In addition, the latest data revealed that workers' pay had slowed as companies gave out weaker bonus payments.
The ONS said annual earnings growth was stable at 1.6%, well above Consumer Price Index (CPI) inflation of 0.3%.
The figures come ahead of Osborne's final budget speech, which is expected at 12.30pm in the House of Commons after Prime Minister's Questions.