The grim record for public sector net borrowing came after the UK slumped into the red by another £23.5 billion in March, according to the Office for National Statistics (ONS).
But borrowing for the financial year to the end of March came within the Chancellor's lowered Budget forecast.
Excluding financial intervention, annual borrowing reached £163.4 billion, which was comfortably below Alistair Darling's latest prediction for £167 billion and far lower than his original £178 billion estimate.
Britain's public sector net debt is now a record 62% of gross domestic product (GDP).
The budget deficit widened by £14.8 billion in March to take the gaping hole in public finances to an all-time record of £107.6 billion over the financial year, more than double the £49.7 billion recorded a year earlier.
Borrowing has soared amid the recession as unemployment and Government actions to help prop up the economy have taken their toll.
However, there were signs of further improvement in the figures.
Total tax receipts rose 3.8% in March, having now risen in four out of the last five months.
VAT receipts rose after the rate reverted back to 17.5% in January as the Government's temporary reduction ended, while corporation tax increased by a hefty 51.4%.
( source: Press Association)
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