The UK population is now growing by 0.7% every year
The UK population grew by 408,000 in 2008 - the biggest increase for almost 50 years, according to the Office for National Statistics.
The total number of people passed 61m for the first time, with changes in birth and death rates now a bigger cause of growth than immigration.
The numbers of people arriving minus those leaving actually fell by 44%.
Minister Phil Woolas said migrants were coming for short periods, contributing to the economy and then going home.
The UK population grew more in 2008 than at any time since 1962, when it rose by 484,000.
Latest ONS figures also show:
There are now a record 1.3 million people aged over 85, making up 2% of the total
There were 791,000 babies born in 2008, an increase of 33,000 on 2007
Half of that increase were to women born overseas, but living in the UK
The population is now growing by 0.7% a year, more than double the rate in the 1990s and three times the level of the 1980s.
Overall, 118,000 more people arrived in the UK than left in 2008 - the lowest level since EU enlargement.
Mr Woolas said this fall in net migration was proof that "only those that Britain needs can come" into the country.
"Britain's borders are stronger than ever before. Our border controls in northern France are stopping record numbers of migrants reaching our shores - 28,000 in 2008," he said.
"The British people can be confident that immigration is under control."
But opposition parties disagreed. The Liberal Democrats called the immigration system "shambolic," saying the true number of new arrivals could be much higher because of "the continuing lack of control over our borders".
Shadow immigration minister Damian Green said: "This puts added pressure on housing and transport, and shows that there is still no proper control over immigration numbers."
Campaign group MigrationWatch UK also dismissed Mr Woolas' claims.
"It is the usual government spin to claim these numbers as a success for immigration policy despite the fact that foreign immigration is virtually unchanged at about half a million a year," chairman Sir Andrew Green told the BBC.
"What has really happened is that EU citizens have voted with their feet - the number leaving has doubled in the face of the deep recession in Britain."
Sir Andrew also said the government's points-based system to control non-EU immigration had so far "had very little effect".
Tim Finch from the left-leaning think tank, the Institute for Public Policy Research, said migration tended to work in cycles.
The need for firm measures on immigration is unchanged
Labour MP Frank Field and Tory Nicholas Soames
"It is now declining sharply - almost certainly because of a combination of the economic downturn, the short term nature of much migration from new EU countries, and the impact of stronger controls put in place by the government," he said.
"There has been a lot of irresponsible scaremongering about immigration in recent years which was based on the false assumption that high migration was inevitable for years to come."
But Labour MP Frank Field and Tory Nicholas Soames, members the Cross Party Group on Balanced Migration, issued a joint statement saying the fall in net migration may well be temporary.
"Even at the present level of immigration, we are still on target for the UK's population to exceed 70 million within 25 years," they said.
"There are no laurels to rest on. The need for firm measures on immigration is unchanged. The public clearly understand this."
Donna Covey from the Refugee Council said the government had to keep the door open to genuine asylum seekers.
"We must make sure that the focus on strengthening Britain's borders does not prevent people fleeing for their lives from getting to safety here in the UK," she said.
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