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michael settle uk political editor
The Prime Minister brushed aside calls from Labour, the SNP and the trade unions to change course, insisting it would be "absolute folly" to do so and would risk Britain's low interest rates.
The fall in growth by 0.2% in the first quarter of this year followed a 0.3% fall in the last quarter of 2011.
A slide in construction output and a stagnant services sector were blamed.
The number of Scots going bust has also risen, with 75 people every working day being declared insolvent as banks and loan firms get tough on struggling customers. New figures by the Accountant in Bankruptcy reported 4856 personal insolvencies, a 4% increase during the final quarter of last year.
The gloomy figures contradicted more upbeat business surveys, prompting some economists to voice doubts about the quality of the data from the Office for National Statistics.
Yesterday's numbers represented only 40% of total data and there will be two further revisions in May and June.
The Prime Minister told MPs the latest figures were "very, very disappointing" and stressed that there was no complacency among ministers in dealing with a tough situation, which had just got tougher.
"This is painstaking, difficult work but we will stick with our plans, stick with the low interest rates and do everything we can to boost growth, competitiveness and jobs in our country," he declared.
Ed Miliband noted the Coalition's "catastrophic" spending review meant that the UK had had a "slower recovery from recession even than the 1930s".
Responding to the Labour leader's claims that the UK Government was going "too far and too fast" in its austerity drive, Mr Cameron claimed there was not a single business organisation, serious commentator or international body that thought the economic woes had only emerged in the last 24 months.
"The debt crisis has been long in the making, the failure to regulate our banks has been long in the making, the Government overspending has been long in the making," the Prime Minister said.
"This is a tough and difficult situation that the economy is in but the one thing we mustn't do is to abandon public spending and deficit reduction plans because the solution to a debt crisis cannot be more debt." At Holyrood, John Swinney, the Scottish Finance Secretary, said that in light of the second downturn Chancellor George Osborne had to recognise the "compelling case for additional infrastructure investment to build sustained recovery".
He renewed the Scottish Government's call for cash to be used for "shovel ready" projects in Scotland worth £300 million.
Mr Swinney was supported by Michael Levack, the chief executive of the Scottish Building Federation, who branded Mr Osborne's refusal to provide extra cash for capital projects in Scotland in this year's Budget "short-sighted".
He warned that the information from federation members on the ground raised fears that "this recession period may be with us for some time to come".
The two sides of industry took different views on the Coalition's deficit reduction programme, with the trade unions calling for a change of tack and business leaders urging the Government to keep to its course.
Brendan Barber, the TUC general secretary, said: "Austerity isn't working. The Government should look across the Atlantic and follow President Obama's alternative that has reduced unemployment and brought growth back to the US."
Grahame Smith, STUC general secretary, described the GDP figures as "devastating" .
He added: "In the UK's current economic circumstances, austerity is simply not a viable path to stability, growth and jobs. If the Coalition Government does not change track soon, it will inevitably consign the UK's economy to a prolonged period of stagnant growth and high unemployment."
Graeme Leach, chief economist at the Institute of Directors, said confidence had already taken a battering from the euro crisis and the GDP figures meant British companies were less likely to boost investment and recruitment this year. "But even though we are back in recession, the IoD does not believe we should slow down on deficit reduction," he added. Liz Cameron, chief executive of Scottish Chambers of Commerce, said the double-dip recession was disappointing but suggested the Scottish economy might be performing better than elsewhere. She said: "This negative picture of the first three months of 2012 is not one that we recognise in Scotland, either in the Scottish Chambers of Commerce's recently published business survey or in a host of other Scottish surveys published over recent weeks. We suspect the Scottish economy has not suffered in the way the rest of the UK has and we are optimistic the official Scottish GDP figures for the first quarter, which will not be published until July, may reveal a more positive situation north of the Border."
Iain McMillan, the director of CBI Scotland, said the negative data was something of a surprise as confidence had improved and, while they were still challenging, underlying economic conditions also appeared to have strengthened.
He said: "In particular, the weakness of the services sector data does not tally closely with a range of survey indicators suggesting that the sector has been picking up through the first quarter."
He added: "Looking forward, there are indications that the UK economy is slowly recovering from the blow to confidence and activity, which resulted from last autumn's turmoil in eurozone financial markets."
