Unemployment fell 29,000 to a 2-1/2 year low of 1.46 million in the three months to November but wage growth eased, official data show.
That brought the unemployment rate down to 4.9 per cent of the workforce, a rate last seen in March to May 2001, the Office for National Statistics said on Wednesday.
The data, which include another strong rise in employment, emphasise the strength of the country's labour market in spite of the economic slowdown of the past two years.
The labour market has been supported by a hiring drive by the public sector as the Labour government pumped money into key public services. The hard-pressed manufacturing sector, by contrast, has shed hundreds of thousands of jobs in recent years.
The ONS said employment grew by 41,000 in the three months to November to 28.15 million from the previous three months.
And the so-called "claimant count" measure of unemployment, which only captures those actually drawing benefit, showed a fall of 8,300 in December to 908,200, the lowest since September 1975 and a figure which represented just 3 per cent of the workforce. That fall was bigger than City pundits had expected.
There was also good news on the average earnings front. The growth in earnings unexpectedly fell back to 3.5 per cent in the three months to November from a year earlier. It had been expected to rise to 3.7 per cent.
The drop was due to lower pay growth in the public sector and in private sector services and will help calm any fears the Bank of England may have that the tightness of the labour market will stoke wage inflation.
The data will be a comfort to Chancellor Gordon Brown and the rest of the Labour government which regularly boasts of the strong employment growth of recent years.
But manufacturing workers will again find no cheer in the numbers which showed employment in the sector falling 116,000 to 3.47 million in the year to November. That is the lowest level since records began in 1984.