Unemployed young people are twice as likely to be on anti-depressants and many have contemplated suicide, a disturbing report has found.
A study for The Prince's Trust found long-term jobless youngsters aged 16 to 25 are suffering "devastating" symptoms of mental illness and often self-harming.
More than 2,000 young people were surveyed, with 40% of those who were out of work saying they faced symptoms of mental illness.
Those unemployed for over a year were more likely to say they had no-one to confide in.
Martina Milburn, chief executive of The Prince's Trust, said: "Unemployment is proven to cause devastating, long-lasting mental health problems among young people.
"Thousands wake up every day believing that life isn't worth living, after struggling for years in the dole queue.
"More than 440,000 young people are facing long-term unemployment, and it is these young people that urgently need our help.
"If we fail to act, there is a real danger that these young people will become hopeless, as well as jobless."
Shirley Cramer, chief executive of the Royal Society for Public Health, commented: "This research proves that unemployment is a public health issue.
"It is one that must be tackled urgently and it is essential that youth unemployment is added to the public health agenda.
"Unemployed young people are struggling in many aspects of their lives, from their mental health and wellbeing to their relationships and their qualifications and we must act quickly to end this."
The Prince's Trust called for urgent support from the government, health agencies and employers to help fund its work with long-term unemployed young people battling mental health issues.
The youth charity said it would support 58,000 disadvantaged young people this year.
Around 280 of those surveyed were not in employment, education or training, 166 had been unemployed for over six months and 135 had been jobless for a year or more.
A Department for Work and Pensions spokesman said: "We understand the effects that unemployment can have and that is why we are doing everything possible to help young people into work.
"It is really encouraging that youth unemployment is falling and that there are 106,000 fewer young people claiming Jobseeker's Allowance than there were in 2010, a number that has been declining for the last 18 months.
"Through the Youth Contract we've hugely increased the number of work experience placements and apprenticeships to give young people the support they need to find a job. By offering employers wage incentives worth up to £2,275 we are helping businesses to take them on.
"The Work Programme has also helped more than 74,000 young people escape long-term unemployment and find lasting work."