Unemployment has fallen by 35,000 to 2.65m in the three months to February 2012, however the number of people claiming job seeker's allowance has risen by 3,600.
According to official figures from the Office for National Statistics the drop in unemployment represents the first decrease since spring 2011.
The number of people claiming job seeker's allowance (JSA) last month increased by 3,600 to 1.61 million, the smallest monthly rise since last December.
Average earnings increased by 1.1% in the year to February, 0.2% down on the previous month.
Despite the drop, other figures from the Office for National Statistics revealed that the number of unemployed women increased by 8,000 in the latest quarter to 1.14 million, the highest figure for almost 25 years. Long-term unemployment has also risen, with the number of people out of work for over a year jumping by 26,000 to 883,000, the worst total since 1996.
The figures also showed an 89,000 rise in the number of people working part-time because they could not find full-time jobs, to a total of 1.4 million, the highest figure since records began in 1992.
But youth unemployment dropped by 9,000 from the three months to November.
Employment minister Chris Grayling said there were "positive steps, but we've still got a long way to go."
"Clearly I want to see more full-time, long term careers," he told the BBC. "Of course, more full time jobs, more people in employment."
There was a 53,000 increase in the number of people in employment to 29 million, although the figure is 57,000 down on a year ago.
The fall in unemployment was the first since the quarter to May last year, with the number of jobless men 43,000 down to 1.5 million.
The number of people classed as economically inactive, including those on long-term sick leave, students, those looking after a relative or who have given up looking for work, fell by 25,000 to 9.27 million, a rate of 23%.
Average earnings increased by 1.1% in the year to February, down by 0.2 percentage points from the previous month to the lowest since the summer of 2010.
Average weekly pay in private firms is £459, compared with £477 in the public sector.
There were 1.4 million working days lost through strikes in the year to February, the highest total since 2002, largely as a result of last November's walkout by public sector workers in the row over pensions.
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