There are record numbers of young people not in education, employment or training, according to the latest official figures.
The government has set itself a target of reducing the proportion of 16 to 18-year-old Neets from 9.6 per cent in 2004 to 7.6 per cent by 2010.
But the latest figures for the end of 2008 show the proportion has instead risen to 10.3 per cent.
And separate data suggested it may have risen further to 11.9 per cent during the second quarter of 2009.
Children's minister Iain Wright admitted the current economic climate had made cutting the number of Neets "challenging".
He said intensive job support is being provided to those who have spent six months as Neets and all under-24s are being guaranteed work-focused training within a year of claiming job seekers allowance.
The official figures also highlight the impact of the recession on the ability of young people to find work and a lack of job opportunities for school and university leavers.
The number of 16-year-old Neets stood at 51,000 at the end of the second quarter of this year. For 17-year-olds the figure was 73,000 and for 18-year-olds it was 109,000.
The total of 233,000 16 to 18-year-olds not in education, employment or training at the end of the second quarter was up from 209,000 at the same point in 2008.
The number of 18 to 24-year-olds who have dropped out of the education system and are not in the workforce increased from 730,000 to 835,000 over the same period.
The proportion of that age group not in employment, education or training stood at 17.6 per cent in the second quarter of 2009.
Alistair Darling said the government was doing all it can to avoid a "lost generation" of young people.
"At the end of last year we had record numbers of young people in education and training," the chancellor said.
"We will, this September, be able to guarantee 16 and 17-year-olds education or training.
"And from the beginning of next year we will be able to guarantee people who have been out of work for a year either a job, training or further education."
Shadow skills secretary David Willetts said the statistics were "worrying" and young people needed more apprenticeship opportunities and postgraduate places, along with better careers advice.

Dods Parliamentary Communications Ltd
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18th Aug 2009 at 4:03 pm