Economists have warned of a faltering UK economy after the number of people claiming unemployment benefit rose to its highest level in almost three years.

The Office for National Statistics (ONS) said the socalled claimant count rose by 12,600 last month - double the amount expected by analysts.

It took the number of people claiming Jobseekers Allowance up to 937,600 and the claimant rate up to three per cent - the highest levels since July 2003 and October 2003 respectively.

Jobless claims have now risen for 13 of the last 14 months, the longest period of increases since the UK emerged from recession in 1992 under John Major's Conservative Government.

Yesterday's figures for March came as the ONS revised February's increase in the number of people claiming unemployment benefit from 14,600 to 19,900.

It was the biggest monthly rise since December 1992.

Ministers defended their record on employment, which the ONS said was at record levels even though the total number of people out of work increased by 30,000 to 1.56 million between December and February.

The figure, which includes people who are out of work but not receiving benefit, has increased by 120,000 over the past 12 months.

The rise in the most recent three-month period was caused entirely by an increase in the number of jobless women.

However, the jobless figure for the West Midlands fell by 2,000 from December to February, compared with the previous three months.

The total stood at 138,000 and the unemployment rate was 5.2 per cent.

Sally Hannah, assistant regional director of the Confederation of British Industry in the West Midlands, welcomed the fall.

She said it possibly reflected the "continuing strength of the financial services sector in terms of business, employment and profits, as well as the continuing excellent work of the MG Rover Task Force one year on from the MG Rover collapse in helping its former employees into new jobs."

But she said the unemployment rate of 5.2 per cent was above the national average and reflected the "continuing fragility of the general economy, particularly in manufacturing."

A national increase in both unemployment and employment came as the number of people of working age increased through immigration and fewer people being classed as economically inactive, particularly those over retirement age returning to work.

Investec Securities economist Philip Shaw said yesterday's figures showed that the labour market was "beginning to slacken at a quicker pace" and the claimant count could reach 1 million by October.

He said the figures "cast doubts on the Bank of England's upbeat view on UK economic prospects this year".

But Mr Shaw said: "The danger is that current labour market developments are signalling that economic conditions are weaker than optimists are claiming, or at the very least that firms' expectations of economic growth over the remainder of the year are relatively modest."

And economist Gavin Redknap, of Standard Chartered Bank, said the figures showed that the domestic economy "is faltering even when economies elsewhere remain strong or strengthen".

The figures showed that while unemployment was up so too were the number of people in work.

Employment levels rose by 76,000 between December and February and by 147,000 over the year to reach 28.84 million - the highest figure since comparable records began.

The number of people classed as economically inactive fell by 13,000 between December and February on the previous three months to 7.93 million, although it has increased by 108,000 on the year.

The number of redundancies in the quarter was up by 6,000 on a year ago to 141,000. Jobs continued to be lost in manufacturing, down by 113,000 or 3.6 per cent in the three month period.

It left just 3.07 million people in manufacturing jobs - the lowest level since records began in 1978.

TUC general secretary Brendan Barber said: "There is a mix of good and bad news in today's figures.

"The number of people in work continues to rise but unemployment has gone up again and more manufacturing jobs have been lost." ..SUPL: