The number of under-25s claiming Jobseekers Allowance has risen 80% to more than 450,000 in the past year.

This costs the UK more than £23 million a week in benefits.

In some parts of Britain - such as Merthyr Tydfil, in South Wales, and Wansbeck, in Northumberland - one-in-six young people are claiming Jobseekers Allowance.

Youth charities may struggle to cope with the spiralling demand in deprived areas according to the report published by The Prince's Trust and the Cass Business School.

Martina Milburn, chief executive for The Prince's Trust, said: "Britain's most vulnerable youngsters will be permanently damaged by the downturn, unless they receive the support they need. We need to help young people into jobs - only with their ideas and creativity will we be able to pull ourselves out of the recession."

The report's findings show youth charities have difficulty attracting major public funding despite their "immeasurable value", with animal welfare charities receiving five times more donations.

Meanwhile, another report showed that almost half of firms are not planning to recruit school-leavers or graduates in the coming months as the recession continues to have a grim effect on job prospects.

Young people are facing a "long, hot summer" looking for work because of the tough outlook for jobs, said the Chartered Institute of Personnel and Development.

A survey of 500 companies showed that only one in five planned to take on 16-year-olds leaving school in the next few months.