Gordon Brown told MPs in the Commons that more people were in work than at any time in the UK's history, despite the financial turbulence in international markets.

To cheers from Labour MPs at Prime Minister's question time, Mr Brown said: "Despite the global financial turbulence, which has meant unemployment rising in America and unemployment twice as high in France and Germany, we have seen unemployment fall in every region and nation of the country over the last year.

"That is only possible because of the policies of stability and by the creation of the New Deal that we will continue to pursue and never happened under the previous Government."

Unemployment was cut by 32,000 in the three months to January to 1.61 million, while the number on Jobseeker's Allowance fell by 2,800 last month to 793,500.

It was the 17th consecutive monthly fall in the claimant count, although it was the smallest reduction since October 2006, said the Office for National Statistics.

Employment levels increased by 166,000 over the latest quarter to reach 29.46 million, the highest figure since comparable records began in 1971.

The number of people employed in the public sector was 5.78 million, up by 7,000 on the quarter but 23,000 down on the year.

The number of jobs also reached a record high, up by 13,000 in December to 31.62 million, the highest figure since 1959, while the loss of manufacturing jobs continued, down by 28,000 in the three months to January to 2.9 million, the lowest for 30 years.

Average earnings increased by 3.7% in the year to January, down by 0.1% from the previous month.