At the end of last year, 527,318 had been receiving the Newstart Allowance for more than 12 months, an increase of 12.6 per cent from a year earlier, Department of Social Services figures show. The numbers of long term Newstart recipients has more than doubled since the global financial crisis.

While many of the people receiving the Newstart payment for more than a year are job seekers, they also include people moved on to the payment by changes to government policy, through measures such as tightening the eligibility for disability support pensions.

Labour market and welfare experts say that being unemployed for extended periods can have a deleterious effect on mental health and can lead to problems such as poor health or depression. They say the rise in long term unemployment also points to changes in the labour market, with a loss of low-skilled work.

Other statistical measures also point to the growing problem of long term unemployment. Recent Australian Bureau of Statistics data shows that the number of people unemployed for more than a year has risen 135 per cent since 2008, when the financial crisis first hit.

Minister for Social Services Scott Morrison said more than 200,000 jobs were created in 2014 and job advertisements were at their highest level in two years.

"While it is encouraging that employment has increased over the last year, most of the growth has occurred over the last three months, so it is too early for it to have had a positive impact on the number of long-term unemployment benefit recipients," he said.

Mr Morrison said changes to Newstart meant more people with disabilities or parental responsibilities had been moved onto the payment and had increased participation requirements. He said government programs were providing incentives to move people away from welfare and into work.

ACTU president Ged Kearney said there needed to be a greater focus on skills and training. She said the Abbott government had overseen the loss of the car industry and cut training programs and public sector jobs.

"Tony Abbott's strategy to address long term unemployment is Work for the Dole, which has been proven to be ineffective. Unemployed people who are placed into work experience must be paid the legal minimum wage or these programs end up taking real jobs."

According to  Department of Social Services data, the number of job seekers on welfare for more than a year in Victoria has risen  9.9 per cent to 62,084 people from a year earlier. Before Christmas, the Andrews government tabled its Back to Work Act as its first bill which offers employers tax breaks and other incentives to hire the long-term unemployed, retrenched workers and young people.

In Australia's biggest state, New South Wales, the number of job seekers on welfare for more than a year has risen  10.4 per cent for the same period to 83,081 people.