The Office for National Statistics has said the jobless total fell by 14,000 between October and December to 2.5 million.
The Department for Work and Pensions said there are more people in work than ever before, with the number of people in employment rising by 154,000 to 29.7 million.
The Work Foundation said the figures show the labour market was continuing to "recover strongly” with the annual tally of new jobs created to 584,000.
Senior economist Charles Levy said:
“We should be particularly encouraged by the fact that our economy is now consistently creating full-time work – full-time employee jobs increased by 167,000 over the three month period. And the number of individuals reporting that they are working part-time because they can’t find full-time work is finally starting to fall.
“However, wage growth remains low, tempering what would otherwise be a very positive picture. Annual increases in total pay were only 1.4% in December, well behind inflation. This means that on average, living standards for those in work are still falling.”
The GMB trade union has said the Lib Dems should “force a change in policy” as new figures showed two and a half million people are unemployed.
Paul Kenny, GMB General Secretary, said:
“That we have mass unemployment of two and a half million five years into this recession is waste on a grand scale.
“To this must be added the millions in enforced temporary and part time jobs and those massively underemployed. There are some employers where temporary and agency staff outnumber permanent staff by two to one.
“What is tragic it that there is no light at the end of the tunnel as we are in the middle of a triple dip recession.
"Even now will the Lib Dems force a change in policy?
“We must not forget that the Tories do not have a majority in Parliament so they could be forced to abandon this failed policy and use the budget for growth.”
Secretary of State for Work and Pensions, Iain Duncan Smith, said:
"The fall in long-term unemployment is particularly welcome and shows that the training and support we are offering is helping people move off benefits and into work.
"These figures show another big increase in full-time jobs, half a million more British people in work over the past year and more women in employment than ever before.
"The UK is now ahead of many its international rivals when it comes to cutting unemployment and creating jobs which is so important as we compete in a global race."