The number of people receiving unemployment related benefits rose by 73,200 in the 12 months to the end of August.

According to the Central Statistics Office, this is the largest annual increase in unemployment ever recorded in this country.

It brings the rate of unemployment up to 6.1% - the highest for ten years.

The news will come as a shock to the Government which is already grappling with the consequences of a rapid deterioration in the public finances.

The increase means that unemployment has now rise by 42% in just one year and August is now the fourth consecutive month in which the annual rise in the numbers on the dole has set a new record.

The total number on the dole now stands at 247,384, the highest level for ten years.

Men accounted for 73% of the increase over the past 12 months, reflecting the impact of the very sharp downturn in the construction industry.

The numbers on the live register do not normally rise during August as a result of seasonal employment patterns. However this year's numbers buck that trend with the numbers on the dole up by 9,100 during this month.

The Irish Small and Medium Enterprise Association described the situation as frightening and accused the Government of standing idly by. It said that many small businesses are reducing working hours and wage rates in order to survive the economic downturn.

Economists are now predicting that the unemployment rate will rise to 8% next year.