New figures on the UK economy show that it fell even deeper into recession in the fourth quarter of last year than first thought, piling the pressure on the prime minister.

Revised data from the Office for National Statistics (ONS) showed that gross domestic product shrank by 1.6% in the last three months of 2008, rather than the 1.5% previously reported. Worse than previously expected output in construction and services was blamed for the downward revision.

It is the worst performance since the second quarter of 1980 and confirms Britain is in the middle of a deep downturn following a contraction of 0.7% in the third quarter of last year and zero growth in the second.

The annual decline was also revised lower, to 2% from 1.9% previously, the worst since 1991.

Opposition politicians claimed the data was another blow to Gordon Brown's authority.

The shadow chief secretary to the Treasury, Philip Hammond, said: "Far from being better prepared for the recession as Brown told us, the UK economy is shrinking more than the United States, and faster than in the previous recession."

The Liberal Democrat Treasury spokesman, Vince Cable, added: "These figures confirm just how hopelessly optimistic the government's assessment of the state of the economy has been.

"Gordon Brown has become his own worst nightmare, presiding over a fall in the UK economy not seen since the dark days of the last Tory recession."

The breakdown of the data also showed a big jump in the so-called savings ratio - the amount households save rather than spend - probably resulting from the big cuts in interest rates in recent months which have improved cash flow to some people.

It also showed that destocking by firms hit a record £4.2bn in the three-month period. The running down of stocks by firms is always a key part of a recession and usually has to run its course before firms are ready to boost production again.

"Inventory shedding in the UK economy is well under way," said Philip Shaw, chief economist at Investec bank.

"It is somewhat more advanced than in other industrialised economies. Hence we are very sceptical of the IMF's claim that the British economy will contract by 3.8% this year and that it faces a worse downturn than the majority of its competitors."

Economists fear the current quarter could show an even deeper contraction after retail sales data on Thursday showed the biggest drop for 14 years, suggesting that consumer spending overall has flagged in the face of tens of thousands of job losses.

Separate data from the Land Registry today suggested that the housing market remains in freefall. It said prices in England and Wales fell by 2% in February, from January, leaving them 16.5% down from a year earlier. The average house price is now down to £153,862.

"While latest mortgage approvals data suggest that housing market activity may have bottomed out and survey evidence indicates that buyer enquiries have picked up significantly recently as people are attracted by lower house prices and the Bank of England slashing interest rates, we remain sceptical that sales will pick up substantially anytime soon and put a floor under prices," said Howard Archer, economist at IHS Global Insight.

The Bank of England's chief economist, Spencer Dale, said in a speech this morning that the economy would probably recover at the end of 2009 but the risks were weighted to the downside and policymakers may need to take more action.

"As we go through 2009, I believe that it is most likely the pace at which output is contracting will ease and that we will see some signs of recovery by around the turn of this year," he told an Association of British Insurers conference.

"I think the risks around this central path are weighted to the downside, reflecting the possibility that the actions taken by the authorities around the world to improve the availability of credit and to restore business and consumer confidence are slow to take effect. So there may still be more to do."

The Bank has already cut interest rates to a record low of 0.5% and has started flooding the economy with cash through quantitative easing.

Dale said it was too early to say whether the easing was having the desired effect but he said there were some "good signs".

But consultancy Capital Economics issued new research predicting that government borrowing could shoot up to £200bn in the fiscal year 2009/10 and then stay at that elevated level for five years.