Lord Green of Deddington warned the figure would continue to rise because of the UK's National Living Wage, which would "increase [the] incentive".
The Office for National Statistics said the net migration figure - which is the difference between the number of people arriving and leaving - was estimated at 333,000 for the year ending December 2015.
This was 10,000 higher than the level recorded in the year to September, which the Office for National Statistics was "not statistically significant".
But Lord Green told Premier it was a "serious disappointment" and claimed "no progress is being made in reducing immigration".
He said: "Virtually half of it now comes from the EU and there is no reason to think that this will fall.
"The effect on housing and public services will be enormous unless and until there is decisive action to bring these numbers down."
Net migration of EU citizens was estimated at 184,000 - up compared to the previous year when it stood at 174,000, and the joint-highest figure on record.
Immigration from the bloc - just the number arriving - was 270,000.
The overall net migration figure, which covers those coming to the country for at least a year, is 3,000 short of the highest level.
It is well above the Government's aim of bringing the measure to below 100,000.
Immigration minister James Brokenshire said: "Net migration from outside of the EU and within the EU remains too high. These figures underline that there are no quick fixes or simple solutions.
"We have cut abuse in student and family visa systems, raised standards in work routes and toughened welfare provisions.
"The new Immigration Act will go further, tackling illegal working and making it harder than ever for illegal migrants to stay under the radar, putting an end to the permissive environment of the past.
"In addition, the Prime Minister re-negotiated our position within the EU. This will close back-door routes into the UK, tackle the artificial draw of the welfare system and make it easier to deal with abuse of free movement and to deport those with criminal records.
"Leaving the EU is absolutely no panacea or silver bullet whatever some may suggest."
Listen to Premier's Antony Bushfield speaking to Lord Green: