Long-term unemployment is the "hidden crisis" of the slow economic recovery as the jobless total looks set to peak at 2.75 million, according to a report today.
The IPPR think-tank said it believed unemployment figures today will show an increase after two months of headline falls.
Its study suggested that the proportion of those unemployed for more than a year is likely to go back up to the peak seen at the beginning of last year.
IPPR said that in such a tough labour market, it is inevitable that many of the people who have lost their jobs in the last 12 months will struggle to find new ones and will join the ranks of the long-term unemployed.
IPPR chief economist Tony Dolphin said: "Long-term unemployment is the hidden crisis of the slowest ever economic recovery in the UK.
"While the youth contract is designed to help young people out of work for more than a year, the work programme has only been able to secure employment for about a third of jobseekers on the programme. Government policy is not keeping pace with joblessness.
"As a general rule, the longer someone is unemployed, the less likely they are to ever return to work.
"Being out of work for more than a year can have a scarring effect, making it harder to get a job as well as having a negative impact on one's health and well-being. This means that even when employment starts to pick up again, the long-term unemployed will find it hard to compete with other jobseekers and could find themselves permanently shut out of the jobs market.
"Long-term unemployment increased by 32,000 - to 887,000 - and is now at its highest level since 1996. The Government should introduce a job guarantee scheme targeted at this group. This would offer them a job lasting for six months that they would be obliged to take up or risk losing their Jobseeker's Allowance."
A separate report by Policy Exchange found that people aged 50 or above who lose their jobs are more likely to remain out of work for longer periods of time than other age groups.
The group also found that older workers were still being discriminated against on the grounds of their age.
Policy Exchange applied for more than 1,200 bar jobs and personal assistant positions as a 51-year-old and a 25-year-old. The responses showed a "huge bias" against the older worker.
The 25-year-old received nearly 125% more positive responses to the bar job than the 51-year-old and 45% more positive responses to the personal assistant position.
The report warned that unless there was a significant shift in the position, serious long-term damage could be caused to the economy and living standards of a large part of the population.
Matthew Tinsley, author of the report, said: "It is not surprising that that there has been less of a focus on older workers. Youth unemployment topped the million mark recently and on the face of it older workers have fared relatively well over the past few decades.
"However, there are now over eight million people aged 50 or over in the UK workforce. The skills and experience that older workers offer employers is vitally important to businesses and the economy as a whole.
"Greater levels of support must be put in place to help unemployed older workers back into the labour market, and to support individuals' opportunities later in life."
Employment Minister Chris Grayling said: "Long-term unemployment is the key employment challenge in Britain. That's why we've launched our Work Programme with a particular focus on helping the long term unemployed get back into the work place.
"I'm confident that as time goes by it will make a real difference for them."