The Government has been warned that unemployment could spiral to 3 million after the biggest jobless rise since 1991 left 1.79 million people looking for work.

Unemployment soared by 164,000, making the unemployment rate 5.7 per cent, in the quarter to August.

The number of people claiming jobseeker's allowance increased for the eighth month in a row.

Prime Minister Gordon Brown vowed to do all he could to keep people in jobs, pointing out that unemployment was higher in America, Germany, France and Italy than in Britain.

Mr Brown said one way to tackle unemployment and at the same time climate change was to train people to install loft insulation.

He said: "We are training large numbers of additional people to do that work in insulation and that will become one of the unemployment programmes that will grow over the next period of time."

He added: "So the need to meet climate change goals and cut people's gas and electricity bills will create work."

David Kearn, economic advisor to the British Chambers of Commerce, said: "The worse-than-expected labour market figures highlight the deepening recessionary pressures in the economy.

"Unemployment is rising and employment is falling at the fastest quarterly rates since the early 1990s. Unemployment will rise above the 2 million mark earlier than we expected."

Vicky Redwood, of Capital Economics, forecast that, at the current rate, the number of people claiming jobseeker's allowance would top 1 million by the end of this year.

Total unemployment would rise by 1.5 million to about 3 million by the end of 2010, she predicted.

The grim figures were compounded by announcements of 1,300 manufacturing job losses in Scotland and Grimsby amid gloomy predictions of worse to come.

Unions and opposition politicians pressed the Government to halt its programme of Jobcentre closures and 12,000 job cuts in the Department for Work and Pensions in the face of lengthening dole queues.

TUC general secretary Brendan Barber said: "This is extremely bad news, and these figures do not even show the effects of the bank crash.

"After years when we could take reasonably full employment for granted, we are now in for grim times. This is the next big challenge for the Government."

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