Large areas of Britain have become so dependent on taxpayer-funded jobs that nearly one worker in four is on the state payroll.

The high level of public sector employment revealed in official figures Monday has been compared with that in the former Soviet bloc.

It affects mainly northern regions, with the North-East leading the way with 23.8 per cent of workers employed by the state followed by the North-West, Wales and Scotland.

According to the report by the Office for National Statistics, a total of 5.85 million men and women work in the public sector. But this may be underplaying the true figure.

Its surveys show another million work for the state than Government bodies admit.

This, said the ONS, is because many of those working for private contractors still see themselves as being in the public sector.

They include school dinner ladies or dustmen, whose wages are paid from contracts awarded by local councils.

The report follows a series of studies by private think-tanks suggesting state involvement in the economy has reached similar levels to the Soviet Union under Communist control in the 1970s.

Independent economists said a huge state sector can push out enterprise and suck in private firms, a process known as "producer capture".

Ruth Lea, of the Centre for Policy Studies think-tank, said: "A private firm looking for business has to look in the public sector.

"As a result, the public sector creeps into every part of the economy, where it stifles dynamism. The economy becomes dependent on the public sector and incapable of change.

"There is a fair comparison with the old Soviet bloc. The psychology in these parts of the country becomes more socialist. It is beginning to look like the 1940s are coming back."

Shadow Chancellor George Osborne said: "It's a great shame that, while Gordon Brown has spent his time and taxpayers' money rapidly expanding the public sector, we have not seen essential public services improve at the same rate."

Over the last eight years, the state sector has taken on 600,000 workers, leading to the domination of some regions highlighted by the ONS.

In the North-East, the population has dropped since the late 1990s but 28,000 more people work for the state.

In Scotland, where the population has stayed the same, 54,000 extra public workers have been taken on since 1999.

The highest number of new public sector workers is in the South-West, where numbers have risen 86,000 since 1999. Some 20.3 per cent of employees now work for the state there.

In the North-West, the population has risen by 54,000 since 1999. But the public sector has taken on an extra 83,000 workers over the same period.

Despite huge levels of migration into the South-East, London has hired only 58,000 extra state workers.