Research by trade association, Tiga, found that employment in the UK games development sector rose by 4% in 2012 after three years of decline.
According to the research, annual investment by studios rose from £411m to £427m between 2011 and 2012 as the number of studios increased from 329 to 448.
The number of jobs within studios grew from 8,888 to 9,224, and jobs supported by studios rose from 16,250 to 16,864.
The research found that the games sector contributed £947m to UK GDP, up from £912m.
Tiga CEO, Richard Wilson, said that the UK economy may be on the verge of a triple dip recession but the recovery in the games development sector has taken off.
"Employment, investment and start-ups are up. The games development industry is growing again," Wilson said.
Wilson noted that the sector’s return to growth has been driven by three factors.
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"Firstly, the increasing prevalence of mobile and tablet devices have created a growing market for games: studios are setting up to meet this demand," he added.
"Secondly, the closure of big console-based studios has been followed by an explosion of small start-up companies.
"Thirdly, the advent of games tax relief, which Tiga was instrumental in achieving, is already stimulating growth."
"Jobs and investment in the games industry are set grow further once Games Tax Relief comes into effect from April 2013."
