The domestic economy grew at its fastest pace for nine years in the second quarter as boosted by the construction sector and strong household spending.
The Office for National Statistics (ONS) said today GDP increased 1.2 per cent in the second quarter of 2010, the fastest rates since the first quarter of 2001.
The figure was revised higher from the initial estimate of 1.1% released a month ago and compared with 0.3% growth in the first three months of the year.
But the ONS warns we face a tough outlook amid severe budget cuts.
Construction sector output was revised up to 8.5 percent - the highest rate of growth for 28 years.
Consumer spending rose by 0.7%, the strongest quarterly rise since early 2008 and compared with a 0.1% drop in the first quarter.
Government spending advanced by 0.3%.
The service industries expanded by 0.7%, with business services and finance bouncing back with 1.5% growth, while manufacturing powered 1.6% ahead.
Retail sales have held up surprisingly well, according to the Confederation of British Industry's August survey published yesterday, suggesting that the momentum continued into the early part of the third quarter.
The GDP figures show that the recovery gathered steam and will allay fears of a double dip recession, but economists are still concerned that grow could slow again due to looming government spending cuts.
The Treasury welcomed the data but was cautious regarding the outlook given massive cuts in government spending which are expected to dampen the economy.
"While the government is cautiously optimistic about the path for the economy, the job is not yet done," a Treasury spokesman said.
The CBI's head of economic analysis, Lai Wah Co, urged caution, saying it was unclear how long the high street expansion would continue.
She said: "The broader outlook for consumer spending is still uncertain, given the VAT rise next year, subdued pay awards and the feed-through of public spending cuts to job losses.Britain exited a record recession in the fourth quarter of 2009, just ahead of the General Election.
The ONS said the economy grew 1.7 per cent in the April-June period compared with the second quarter in 2009. This was also revised higher from an initial estimate of 1.6 per cent.