Mr Montoro told a parliamentary commission on Thursday that official figures due out Friday will show 5.4m people were out of work at the end of December, up from 4.9m in the third quarter, when the jobless rate was 21.5pc.
Spain already has the highest unemployment rate in the 17-nation eurozone and is near its record of 24.5pc unemployment, set in 1993.
The new conservative Popular Party government has pledged major labor reforms in a desperate bid to halt further job losses. A similarly-aimed reform in 2010 by the previous Socialist government appears not to have had a major effect on the labor market.
The economy is expected to fall back into recession this quarter - GDP fell 0.3pc during the last three months of 2011 and is expected to slide further through March.
"The government's policy must be to overcome, and do so as quickly as possible, the worst economic crisis in our history, the biggest destroyer of employment, the one that has most sapped our youths' confidence in their future," said Mr Montoro.
He said the crisis had placed Spain at "the epicenter of the euro's problems".
Spain, which also has a swollen deficit, is battling to avoid being dragged further into a debt crisis that has already forced Greece, Ireland and Portugal to seek financial bailouts.
The 5.4m jobless cited by Montoro on Thursday was up from a 5.3m estimate conservative Popular Party Prime Minister Mariano Rajoy made recently. Rajoy took office in December after his party won a landslide victory in elections the previous month.
Spain began in 2010 to emerge from a near two-year recession triggered by the collapse of a property and construction bubble that fueled growth for nearly a decade.
But that recovery has gone into reverse. The Bank of Spain predicts the economy will contract 1.5pc this year, saying the eurozone debt crisis has wasted business confidence and choked off bank credit, causing a massive drop in domestic demand, only partially offset by strong exports.
The Telegraph
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