Thousands of newly qualified nurses and other health professionals will be without jobs by the time they graduate this year, the BBC has learned.
The Royal College of Nursing said nurses were still needed
A survey of 20 universities suggested that more than 80% of nurses qualifying this summer have yet to find a job, compared to 30% this time last year.
Some trusts have imposed recruitment freezes because of mounting deficits.
The Department of Health said jobs existed for newly qualified nurses but they needed to be flexible on location.
The department described the survey as "limited" - and said it ignored the fact that the number of nurses working in the NHS had increased by 85,000 since 1997.
The Council of Deans, which represents health faculties and did the research, said the situation was very serious.
It warned of significant consequences for unemployed nurses who have incurred considerable student debt, and fears course applications may be affected by the bleak outlook.
Janet Davies, an executive director at the Royal College of Nursing, said: "These are deeply worrying figures and throw into sharp relief the impact of the financial crisis in the NHS.
"In order to tackle burgeoning debts, trusts have cut or frozen the very posts that newly-qualified nurses would move into.
"This is a short-term move which will have a devastating impact not only on student nurses, but on the rest of an over-stretched nursing workforce, and on patient care."
The survey also suggests only a quarter of students who have already graduated from one London university have found work.
And just 5% from a North East Midwifery faculty have secured a post.
The Department of Health said as a consequence of measures taken to reduce vacancy rates, there was now more competition for jobs.
"More nurses and more competition for posts means they have to be flexible about where they work.
"This limited survey ignores the fact that the number of nurses working in the NHS has increased by 85,000 since 1997."
Shadow Health Secretary Andrew Lansley said: "It is unacceptable that people who are dedicated to public service are being undermined by the government's financial mismanagement of our NHS.
"The recruitment freeze and job losses in hospitals have created a bottleneck of trainee nurses.
"Meanwhile, we have a shortage of nurses in the community, where the government claim more NHS services will be provided."