Britain is in the grip of an "unemployment emergency", the Labour Party said as jobless figures revealed a 17-year high of 2.68 million or 8.4 percent of the workforce.

The rise of 118,000 on December's figures includes shock youth unemployment figures with the rate standing at almost a quarter, or 23.1 percent.

"Chris Grayling [government work and pensions minister] told us how the labour market was stabilising but today's figures confirm we have an unemployment emergency," said Labour's shadow work and pensions minister Liam Byrne.

"Unemployment has soared to the highest level for a generation and long-term youth unemployment has more than doubled since January last year.

"In America, Germany and Japan unemployment is either flat or falling. This is new proof that the government must change course."

He added: "Complacent and out-of-touch ministers need to wake up to the jobs crisis they're responsible for and take urgent action now."

There are 9.23 million economically inactive people aged between 16-34 in the UK, down 60,000 on the quarter.

"This level of unemployment is clearly much too high. I really don't want to see any increase in unemployment," Grayling told Sky News.

He insisted employment was a priority for the government.

Grayling tried to defend the figures by highlighting that while unemployment was up, so too was the level of employment, with 18,000 more people in work since the last set of data.

Some people who were previously economically inactive are now looking for jobs, further skewing the figures, he claimed.

Unemployment will hit three million in 2013, according to some forecasts.