JobcentrePlusLong-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.

The IPPR think-tank said it believed the latest unemployment figures will show an increase after two months of headline falls.

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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.