The unemployment rate fell by 0.1% in the three months to January 2010, marking the first quarterly fall since the three months to May 2008, official figures revealed today.
The number of unemployed people fell by 33,000 over the quarter to reach 2.45 million, or 7.8% of the working-age population, the Office for National Statistics (ONS) said.
There has not been a larger quarterly fall in the number of unemployed people since the three months to July 2007.
However, the number of people unemployed for more than 12 months increased by 61,000 over the quarter to reach 687,000, the highest figure since the three months to August 1997.
The number of people claiming Jobseeker's Allowance (the claimant count) decreased by 32,300 between January and February 2010 to reach 1.59 million. This is the largest monthly fall in the claimant count since November 1997.
The inactivity rate for the three months to January 2010 was 21.5%, with the number of inactive people of working age rising by 149,000. The rate has not been higher since the three months to October 2004, and it is up 0.4% on the quarter.
This increase in inactivity was largely driven by the number of students who are not in the labour market, which has increased by 98,000 on the quarter to reach 2.31 million - the highest figure since comparable records began in 1993.
The number of vacancies for the three months to February 2010 was 480,000, up 39,000 over the quarter. There were increases in vacancies in most industrial sectors.
Work and pensions secretary Yvette Cooper said: "The fall in unemployment for the third month in a row is very welcome, but we should remain cautious. We're not out of the woods yet and we are still determined to do more to support jobs and help the unemployed this year.
"We know things will be difficult for some time, and unemployment in the eighties and nineties rose for years after the recessions finished. That is why we plan to increase help to get people back into jobs this year, not cut it back, so we can support the jobs of the future."