Two of the UK's three worst unemployment blackspots are in the south Wales valleys, according to a study published on Tuesday.

The research showed Merthyr Tydfil had an unemployment rate of 28% - the highest jobless percentage in Britain.

Our report challenges the myth that full employment is just around the corner

Professor Steve Fothergill, author

Nearby Blaenau Gwent has been cited as having the third highest unemployment rate in the UK, with 23% out of work.

The study, by researchers at Sheffield Hallan and Warwick University, also claimed the true extent of unemployment in Wales was 195,000 and not 55,000 - the official government figure.

The Real Level of Unemployment 2002 report blamed extensive hidden unemployment for the discrepancy between the figures.

It claimed that many people had been diverted from unemployment benefit to claim sickness benefits instead.

Throughout the UK, the study claims official unemployment figures have fallen by 800,000 since 1997, but hidden unemployment has risen by 200,000.

The study contradicts claims made by Chancellor Gordon Brown that full employment can be achieved within a generation.

There are areas of deprivation in Merthyr

Professor Steve Fothergill, who led the report said: "Our report challenges the myth that full employment is just around the corner.

"The official unemployment figures only give a partial view of the labour market, and they serve to mislead the economic commentators and policy makers.

Mr Fothergill said it must be galling for people in Merthyr to hear Gordon Brown talking about the economy being at or near full employment when his report showed the reality was different.

"Labour ministers have often acknowledged that too many people have become parked on benefits like incapacity benefit," he said.

It is very difficult to find work in Merthyr

Unemployed Merthyr man

"What they have failed to recognise is the extent to which this hides the real level of unemployment.

"They should also recognise that, although some parts of the south of England do now have very low rates of unemployment, much of the rest of the country is still a long way behind," he added.

Some people searching for work in the area are not surprised at the findings of the report.

One man at Job Centre Plus in Merthyr said: "It is very difficult to find work in Merthyr.

"I think there has been long-term under-investment throughout the valleys," he said.