Full employment, in the modern sense, is actually within our grasp for the first time in a generation

Tony Blair

The last time it dropped below a million was a generation ago in December 1975 when it stood at 997,100.

Mr Blair described the news as a "very significant milestone" on the road to creating a Britain where everyone had the chance to succeed.

However, another measure to count unemployment, the so-called ILO labour force survey, is still well above the claimant count, falling by 81,000 between November and January to 1,535,000.

When the Labour Party came into government, it said it preferred the ILO count over the claimant count.

Pre-election boost

Even so, the announcement is sure to give ministers a huge pre-election boost.

Its significance was underlined at a press conference attended by Mr Blair, Chancellor Gordon Brown and Education and Employment Secretary David Blunkett.

New figures

January claimant count down 10,700 Jobless rate 996,200 or 3.4% January average earnings up 4.4% Job vacancies at record 233,700 People in work at record 28.09m

They announced a range of measures aimed at bringing the jobless total down even further.

The prime minister said the government was "proud" of what it had achieved but there was still more to do.

"We must concentrate our efforts on the hardest to help and ensure we create employment opportunities for all," he said.

The flagship New Deal jobs scheme, which has so far helped 270,000 young people find employment, will be extended to groups including lone parents and people with disabilities.

Also helped will be those over 25-years-old and partners of jobless people - but they face withdrawal of benefits for up to 26 weeks if they fail to take advantage of the new opportunities on offer.

Action teams

A �100m package will include compulsory interviews and special schemes to help unemployed people with basic skills problems and drug addicts.

New "action teams" with �120m funding over three years will focus attention on areas worst hit by unemployment.

Mr Blunkett said a million unemployed people on benefits was "still too many".

But the new figures were "a major milestone, which shows how we are changing Britain from a welfare state into a working state."

Gordon Brown won resounding cheers when he announced the unemployment news to the Parliamentary Labour Party.

In his post-budget briefing to Labour MPs, the chancellor said falling unemployment would be a key weapon in the upcoming election battle.

He said the Conservatives would abolish the New Deal while Labour's aim of full employment would allow cash to be switched from paying benefits to boosting public services.

Training criticised

Tory shadow employment secretary Theresa May said although it was "good news" when unemployed people got jobs "sadly the speed at which that has been happening has fallen in the last four years".

Theresa May says fall should have been swifter

"The alternative is to have a system that actually focuses more clearly on getting people into a job as soon as possible," she told the BBC.

"Our proposal is to replace the New Deal to do exactly that."

The Conservative proposal - called Britain Works - was also unveiled on Wednesday and would involve the private sector.

Firms would be offered incentives to get people into jobs and further payments to keep them long term.

Treasury warning

Liberal Democrat Treasury spokesman Matthew Taylor also welcomed the latest figures but warned there was "a cloud on the horizon".

Manufacturing and farming had both suffered big falls in employment driven by the high pound which Labour had done nothing to address, he said.

The unions welcomed the figures, with TUC general secretary, John Monks saying: "It is another step on the road to full employment and is in stark contrast to the 80s and 90s when full employment was regarded as an unacceptable dream."

General secretary of public service union Unison, Dave Prentis, said the jobless fall would "help heal the economic wounds of a generation".