Employment now stands at an all time high of 29.51 million people in work, an increase of 450,000 in the last year.

People claiming job Seekers Allowance (JSA) fell to 794,300, the lowest for 33 years.

Employment minister, Stephen Timms, said, "These are superb figures and show the real underlying strength of the labour market. We are now in the credit crunch and the challenges are here, but the evidence is that we are weathering things well," he added, pointing to the low level of redundancies and record high vacancy figures.

Labour market data is traditionally a lagging indicator because firms tend to keep labour for a while in an economic slowdown before making layoffs in the hope that the downturn will be temporary. Nevertheless economists acknowledged that the headline labour market statistics were good and a reflection of several years of very strong economic growth and record profits for British firms.

The ONS figures highlighted a rise in redundancies in the financial services and construction sectors, which are the sectors which have been hardest hit so far by the credit crunch and the slump in commercial property prices.

Average earnings growth slowed to 3.7% in the three months to February from a year earlier, down from 3.9% in the three months to January. That was the lowest since last July and suggested that low unemployment and high employment were not feeding through into wages.