The result brings an end to six consecutive quarters of shrinking output for the British economy.

Despite the return to growth, the estimate from the Office for National Statistics came in below most analysts' forecasts for a 0.2% to 0.4% increase in gross domestic product.

The ONS also revealed that the economy shrank by 4.8% last year - the biggest annual decline since records began in 1949.

Overall, the economy has contracted by 6% since the recession began in 2008.

The lower-than-expected growth will fuel concerns that recovery will be weak - and that Britain may succumb to a "double-dip" recession.

Speaking to Sky News, Business Secretary Lord Mandelson warned that businesses face a lengthy struggle after taking drastic steps during the recession.

"They've had to cut costs, which might actually strengthen them in the long term, but in the meantime it is tough medicine for some people," he said.

"We're going to have to continue to be careful during the course of this year."

Miles Templeman, boss of the Institute of Directors, told Sky News that a sustained period of stability was needed if the recovery was to gain strength.

He added: "We need interest rates to stay low, we need tax to stay where it is - that's bad enough already - and we need the ability to exploit international markets.

We're at the beginning of a move forward, and that's a positive message. But the reality for many individuals and many companies is it's still going to be very tough this year."

The fourth-quarter upturn was driven by the distribution, hotels and restaurants sectors, while manufacturing also rebounded, according to the ONS.

Government and other services also helped the expansion, although there was a small decrease in business services and finance in the quarter.

This initial estimate of GDP is based on just 40% of the relevant data, leaving the measure vulnerable to revisions in either direction when the ONS publishes its next set of figures in February.

Source: Sky News