The Trades Union Congress (TUC) has said this drop proves that the Government needs to put a greater focus on jobs and an increase in wages.
TUC general secretary, Brendan Barber said: "An over-reliance on the housing bubble and personal debt exaggerated income growth in the run up to the recession. Now families have been hit by the biggest squeeze in their living standards in nearly a century.
"That's why high quality jobs and a fairer distribution of decent wages must be at the heart of our economic recovery plan."
Barber added: "A return to business as usual, where those at the top grab an ever larger slice of a dwindling earnings pie, will simply create another huge bust."
The data shows an economy that has been stagnating. In the second quarter of 2012 net national income per head in real terms was 13.2% below its pre-recession level in the first quarter of 2008.
It also found that a mixture of deep recession and high inflation has left national wellbeing in Britain more than 13% down on its level before the global financial crisis.
The video below from the ONS explains why it measures national-well-being.
