The employment rates for disabled people, older workers, lone parents and people in deprived areas continue to close the gap on the overall employment rate.
The report also shows steady progress towards the Government's target to reduce the number of children living in low-income households and sharp falls in the number of pensioners on low incomes.
Secretary of State for Work and Pensions Andrew Smith said:
"This Government is committed to building a fairer, more inclusive society where nobody is held back by lack of opportunity. This report shows we are making progress towards this goal, but there is still much to do.
"Social exclusion takes many forms so this report looks at indicators ranging from low-incomes to educational underachievement to teenage pregnancy. It shows a clearly positive trend for 33 of 55 indictors, while none show a clear negative trend. So the overall picture is improving.
"We know that work is the best route out of poverty. Adults living in households where no one works are five times more likely to live in a low income household than those where at least one person works.
"There are now nearly 28m people in work in the UK - that's more than ever before. We have made this possible by creating a strong, stable economy, by making work pay through minimum wage and the new tax credits, and by revolutionising the help and support people receive to help them move off welfare and into work."
Key indicators of progress so far are:
* Overall employment up by over 1.5m since 1997
* Disabled people in employment up from 43.5% to 49.1% since 1998
* Older people in employment up from 64.7% to 70.1% since 1997
* Lone Parents in employment up from 45.6% to 53.4% since 1997
* Ethnic Minority people in employment up from 57.3% to 58.3% since 1998
* People from deprived areas in employment up from 63.2% to 64.4% since 2001
Continuing steady reductions in the number of children living in low-income households - whether measured in absolute or relative terms - representing further progress towards the 2004 target
Pensioners living in absolute low-income households down by well over half since 1997. And the declining number with disposable incomes that are low in relative terms shows that not only are poorer pensioners' incomes rising, but that they are rising fast enough to narrow the gap with the rest of society
Proportion of households living in poverty halved from 16% to 8%
Andrew Smith went on to say:
"Our strategy will remain focussed on addressing the deep-rooted causes of poverty. But there is no escaping the fact it will take time to tackle and our approach will continue to evolve as we learn what works best.
"I have announced changes today to back to work help for over 50s which are a good example of this. Only by being prepared to learn and innovate will we reach our goal of a fair, inclusive society where nobody is held back."
