During the year, Britain recorded 1,431 investment projects from overseas companies, representing a 17 per cent rise since 2005-06, and nearly 80 per cent rise since 2003-04.

The USA was the biggest overseas investor in Britain, with 540 projects, way ahead of second-placed France with 95. Indian companies set up 69 projects during the year, the figures reveal.

John Hutton, British secretary of state for business, enterprise and regulatory reform, said: "For the fourth consecutive year, the UK has attracted a record number of investment successes, maintaining its position as the largest recipient of foreign direct investment in Europe and second only to the US worldwide.

"From Siemens to Amgen, Sega to Airbus, the UK has won projects from world-class overseas companies, proving we can compete at the international stage, despite increasing competition and the challenges of globalisation.

"Increased headquarters projects and the growing number of expansions from existing investors suggest companies are recognising and capitalising on the UK's 'multiplier effect'. Not just an investment destination, the UK acts as their catalyst for global growth."

Services, with the financial and IT sectors to the fore, accounted for more than a third of the new jobs, with manufacturing, research and development and distribution following. The figures, published by UK Trade and Investment, demonstrate the increasing importance of India and China to the British economy.

British foreign secretary, David Miliband, said: "Established economies continue to be a very important source of FDI for the UK, yet increasingly we are seeing more investments and projects from the high growth economies.

"Over the next decade, our economy is expected to grow by roughly 25 per cent, while China and India will triple the size of their economies and boast more 40 per cent of world growth. These are compelling statistics which we ignore at our peril and underline the significant potential for targeted UK engagement in these markets."

Digby Jones, British minister for trade and investment, said: "The flexibility of British business is a key strength but we face tough competition and cannot be complacent.