Latest official figures show that one in every 10 British teenagers is neither employed or in education.
The Government has a target to reduce the proportion of young people not in education, employment or training (Neet) to 7.6 percent by next year.
But the latest annual data from the end of 2008 puts the figure at 10.3 percent, caused by a large increase in the number of Neet 18-year-olds, the Department for Children Schools and families said.
The percentage of 16 to 18-year-olds who fall into the same bracket has remained higher in the past year than in the previous 12 months.
This means 261,000 young people had no job and were not studying. The figure rose to 1,082,000 among 16 to 24-year-olds.
The data shows that the number of Neet 16 to 24-year-olds in the third quarter of 2009 was higher than at any time since 2005, accounting for nearly a fifth (18 percent) of the age group.
"It is a damning indictment of the Government's failure to help young people during the recession," the Telegraph quoted David Willetts, the shadow skills secretary, as saying.
He added: "Despite all Gordon Brown's guarantees and pledges, the number of young people neither earning nor learning is increasing at a rate of more than 9,000 a week. Ministers must stop making empty gestures that do so little to help young people."
Iain Wright, the Schools Minister, said: "We are giving all 16 and 17-year-olds the opportunity to stay in education or training so they can gain the skills they need to succeed in an increasingly competitive labour market.
"We must not repeat the mistakes that were made in recessions of the past and abandon a whole generation of young people. We recognise that we need to carry on helping young people through this tough economic climate."