The number of people claiming unemployment benefit is likely to go up to more than a million next year, according to figures in the pre-Budget report (PBR).
The Liberal Democrats today highlighted the list of "key assumptions" on which the chancellor's economic plans are based, which include a major rise in the claimant count.
The PBR notes a National Audit Office (NAO) assumption that claimant numbers will be "rising slowly to 1.01 million in 2007-08, from recent levels of 0.96 million".
"This is the first acknowledgement by the Treasury that unemployment will continue to rise, despite the optimistic forecast for the economy," said Lib Dem Treasury spokesman Vince Cable.
He added: "My particular anxiety is that rising unemployment is contributing to rising home repossessions, because very few home buyers are properly insured against loss of income, and there is little support from the benefits system."
Mr Cable challenged Gordon Brown on this issue in the House of Commons this morning, saying the predicted employment rise was "alarming".
But the chancellor rejected the claims, saying: "We don't make projections about the claimant count. I have to tell him that it's not been the history of any government to project what unemployment is going to be a year from now."
He noted the number of people claiming unemployment benefits was 1.6 million in 1997 but has fallen to about 900,000. "That is an achievement in itself," Mr Brown told MPs.
Conservative MP Peter Bone also pressed the chancellor on this question saying it had gone down in 527 constituencies since 1997 - including his own of Wellingborough.
His comments followed an attack by shadow chancellor George Osborne yesterday, who questioned why there was no mention of employment in Mr Brown's PRB statement.
In reference to Mr Brown's expected move to No 10 when Tony Blair quits as prime minister next year, he said: "He is so obsessed about securing his next job that he has forgotten about the 300,000 people who have lost their jobs."
However, Mr Brown today insisted: "The one thing the opposition cannot say is that the two and a half million jobs created in Britain in the last ten years is not a record."
The latest figures suggest 961,300 people are currently claiming unemployment benefits, with a total of 1.7 million people out of work. This is up 263,000 on the previous year - however, the number of people in work is also rising, to 28.99 million.