After nine months of rising unemployment, the jobless tally unexpectedly falls for the first time in almost a year.
Unemployment fell by 35,000 between December and February to 2.65 million, according to official figures from the Office for National Statistics - the first quarterly fall since May 2011. The unemployment rate is now 8.3 per cent, 0.1 per cent down on the previous three months.
But the number of people claiming jobseeker's alowance rose in February by 3,600 to hit 1.61 million - the 17th month in a row that it has risen.
The number of unemployed women rose by 8,000 in the latest quarter to 1.14 million, the highest figure for almost 25 years. Those out of work for more than a year climbed by 26,000 to 883,000, the worst since 1996.
Today's figures are a step in the right direction, but we still have a long way to go. Chris Grayling, Employment Minister
The figures also show an 89,000 rise in the number of people working part-time because they could not find full-time jobs, to a total of 1.4 million, the highest figure since records began in 1992.
The number of jobless men fell by 43,000 down to 1.5 million. There were 1.03 million unemployed 16 to 24-year-olds, down by 9,000 from the three months to November and the lowest total since last autumn.
The employment rate for those aged 16-64 was 70.4 per cent, up 0.1 per cent on the quarter. There were 29.17 million people in employment aged 16 and over, up 53,000 on the quarter.
Employment Minister Chris Grayling said: "Today's figures are a step in the right direction, but we still have a long way to go. We are pushing ahead with our strategy to promote investment and new jobs in the private sector and support people currently without work to take up those jobs. I am particularly encouraged that overall employment is now growing despite reductions in the public sector."
The fall in unemployment coincides with a report from the left-of-centre Institute for Public Policy Research (IPPR), which says that by the end of 2012, 962,000 people will have been out of work for more than a year, the highest since the end of 1995.
The report calls long-term unemployment the "hidden crisis of the slowest ever economic recovery".
IPPR Chief Economist Tony Dolphin writes: "Unemployment is not going to fall until the middle of 2013 and the number of people out of work for more than a year is going to grow to almost a million by the end of this year.
"The longer someone is unemployed, the less likely they are to ever return to work. Being out of work for more than a year can have a scarring effect, making it harder to get a job as well as having a negative impact on one's health and well-being.
"This means that even when employment starts to pick up again, they will find it hard to compete with other jobseekers and could find themselves permanently shut out of the jobs market."
The report argues that the government should guarantee everyone unemployed for more than a year a job at the minimum wage in local government or the voluntary sector. Those failing to accept a job would risk losing their benefits.
There are 855,000 people who have been unemployed for more than a year, half of them over 50.
According to the IPPR, more than a million women (1,126,000) are now unemployed, the second highest since for 25 years and a rise of 85,000 over the last year.
Over a quarter of women (308,000) have been unemployed for more than a year. More than a million 16 to 24-year-olds are unemployed, a quarter of them for more than a year.
The government is trying to combat unemployment through its youth contract for young people and work programme for older people.
It is also counting on the private sector to compensate for austerity-driven job cuts in the public sector. But the IPPR says that private sector employment is not rising fast enough to do this.