Dole queues rose by 15,000 in the West Midlands over the past year, as the number of claimants in the region reached 112,375.

The number of jobseekers allowance claimants in October was up from 96,852 last year, an increase of 15,522 over 12 months.

The latest job figures also showed the region had an unemployment rate of 6.5 per cent, above the national average.

Across the UK as a whole, unemployment rose by 140,000, with 1.8 million people now searching for work.

It was the highest figure since the end of 1997, shortly after Labour came to power. The national unemployment rate is now 5.8 per cent.

Manufacturing has been worst hit as a result of the credit crunch, the unemployment figures show.

The number of jobs in the manufacturing sector across the country fell by 47,000, a cut of 1.5 per cent, in one year.

Employment Minister Tony McNulty admitted the Government expected unemployment to continue rising.

He said: “I fully accept that we are not at the bottom of the downturn. In think that is very clear.” The increases in unemployment justified the measures the Government had taken to help British banks, he added.

“We are doing that to fix the real economy and get credit flows back to small businesses especially, so they can maintain jobs and, where possible, bring new jobs in,” he added.

Job centres were preparing for an influx of new customers including those “who have never been near a job centre before”, he said.

Birmingham Chamber of Commerce said the increase in unemployment was “a bitter pill to swallow”.

Policy adviser Katie Teasdale said: “Businesses are responding to falling demand, low confidence and cashflow difficulties in an acutely challenging economic environment.

“Job losses are no longer confined to construction firms and their supply chain. Notably manufacturers and telecommunication firms have recently announced job cuts and, despite last week’s massive interest rate cut, it seems that unemployment figures will continue to rise into 2009.

“Clearly, these are very challenging times for the business community as well as employees and their families.”

John Phillips, West Midlands regional director of the Institute of Directors, said: “Unemployment is a huge evil and the tentacles get into every part of society. “The overall costs, including social costs, can quickly spiral out of control.”

Party leaders clashed over the unemployment figures in the House of Commons. Gordon Brown said the Conservatives needed to “enter the real world”, back his plan to help Britain deal with the recession and there was increasing support for a “fiscal stimulus”.

But Tory leader David Cameron said: “Only this Prime Minister could be quite so smug on the day 140,000 people have lost their jobs.”