More than 45.2 million people either fled their own countries or were internally displaced in 2012, compared to 42.5 million the year before, the United Nations High Commissioner for Refugees said in its annual global trends report.
War remained the dominant reason for displacement — 55 per cent of all refugees came from five war-affected countries: Afghanistan, Somalia, Iraq, Syria and Sudan.
"These truly are alarming numbers. They reflect individual suffering on a huge scale and they reflect the difficulties of the international community in preventing conflicts and promoting timely solutions for them," Antonio Guterres, UN High Commissioner for Refugees and head of UNHCR, said in a statement.
The number of refugees actively seeking asylum in other countries is also on the rise.
A total of 893,700 claims were submitted around the world, a three per cent increase from 2011 and the second-highest level of the last decade, the report said.
"The number of individual asylum applications registered with governments or UNHCR in 2012 reflects a continued increasing demand for international protection throughout the year," the report said.
The new figures come as Canada is in the midst of a shift in refugee policy, changing everything from which refugees it will accept to how their claims are processed.
The Conservatives will narrow resettlement efforts in 2013-2014, focusing on only three to five populations, the immigration department's planning report shows.
The populations will be chosen in consultation with the UN and other countries, the Citizenship and Immigration department said.
"Targeting specific populations over a few years will allow us to focus our efforts, maximize our resources, and expedite the processing of cases," spokesman Bill Brown said in an e-mail Tuesday.
"This approach will help Canada improve refugee outcomes as we will be able to better plan for arrivals."
Though the restrictions will only apply to those refugees resettled by the government, observers have suggested the government has already begun cherry-picking refugees via the various caps and bans in place on sponsorship applications from certain areas.
The government argues the caps are necessary to bring down processing backlogs but at the same time, they are asking private groups to take in more of the refugees it selects.
"Canada's response risks becoming more politicized, with specific programs increasingly initiated by the minister, without a transparent process of consultation," the Canadian Council for Refugees wrote in a recent briefing paper on the issue.
"Politicization compromises the human rights and humanitarian basis of the program."
Which populations will be targeted under the new program haven't been announced, but the government already has programs for Bhutanese refugees from Nepal and Iraqi and Iranian refugees in Turkey.
Many of the people considered refugees by the UN do not seek resettlement elsewhere, instead living in camps or other temporary locations until they can return home.
Last year, the UNHCR submitted over 74,800 refugees for resettlement, one-fifth less than in 2011, largely due to security constraints and processing backlogs, the report said.
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Canada and the United States together take in nine out of every 10 refugees the UN selects for resettlement, though the U.S. takes in far more. Last year they accepted 66,300 and Canada took 9,600.
That's actually less than Canada had hoped to resettle.
The government had been aiming to accept 13,000 as part of a pledge to increase annual resettlement by 20 per cent.
Much like the UN, it pinned the lower numbers on the closure of visa offices in Damascus because of the ongoing conflict there as well as difficulties with field efforts in Africa.
The ongoing conflict in Syria has produced some 1.6 million refugees on its own, with most in camps in neighbouring countries.
Though Canada has contributed over $100 million in aid to assist Syrian refugees, it is not actively trying to resettle them.
Immigration Minister Jason Kenney said that the government is, however, continuing to work on speeding-up applications from Syrians in the system.
"We have nearly completed processing all of the family reunification applications for people in Syria who were already in our system," Kenney said.
In addition to an overall increase in refugees, the UNHCR also reported growth in the number of unaccompanied or separated children making refugee claims of their own.
Of the 21,300 applications filed by those under the age of 18, 280 were made in Canada.
It's the first time Canadian figures have been captured in the UN's analysis of child asylum seekers world-wide.
Some children come to Canada via government resettlement or private sponsors, but what to do with those who arrive in Canada illegally has been part of the ongoing debate in the Commons in the last year over changes to refugee policy.
Several dozen children have been part of waves of asylum seekers who have arrived in Canada via ships in the last few years and a new bill has now passed that makes the detention of people who arrive in that fashion mandatory.
Parents are given the option of keeping their children with them or having them placed with foster agencies, despite widespread opposition to the mandatory detention of children.
Refugee advocates are also decrying the effect that changes to refugee health care benefits are having on children refugees.
Last year, the government ended the practice of covering supplemental or extended health care for refugee claimaints except in certain circumstances, arguing that generous benefit programs were a draw for bogus refugee claimaints and those seeking asylum shouldn't get the same benefits as other Canadians until their claims have been approved.
During national protests against the cuts Monday, one doctor told a story of a child who required an amputation but initially had none of his counselling or equipment covered by the government, because his claim was pending.
The family had to wait until the claim was accepted, said Dr. Lindy Samson, a member of the Canadian Pediatric Society.
"His treating health-care team believes strongly, though, that the delays have had a significant impact on his well-being," she said.