The contraction of gross domestic product (GDP), which was worse than most forecasts, compared to a 0.9% rise in the previous three months.
Britain now appears closer to its third recession in four years, or the so-called triple-dip recession.
GDP is seen as the broadest measure of a country's economic output, and the figure undergoes regular revision as more data reaches statisticians.
The ONS said GDP contracted partially on lower output from the North Sea resource producers and manufacturers.
Mining and quarrying also suffered its biggest fall in output since records began in 1997.
Quarries supply a range of other sectors including construction, railways and roadbuilding - including pothole repairing.
The ONS also said it was the biggest contraction in Government and other services sector since the second quarter of 2008.
The figure now raises more concerns over the economic policy of the coalition Government.
On Thursday it defended its austerity programme against criticism from the International Monetary Fund's chief economist.
The economy is now 3.3% smaller than its peak in Q1 2008, recovering only about half the output lost during the financial crisis - a worse performance than other major economies.
The disruption to North Sea oil and gas fields was partially attributed to a maintenance programme which saw the shut down of certain key pumping infrastructure.
This knocked 0.18% off GDP, while slightly smaller amounts of damage were done by a fall in factory output and in the 'Government and other services' category.
In the third quarter this sector was boosted by the London Olympics effect on sports and recreation services.
At the start of 2013 one-off factors, such as January's snow, may seal the fate of an economy on a knife-edge between growth and contraction, with major retailer John Lewis already warning that snow had hit sales growth.
Some experts believe the country can still avoid the feared return of recession.
Experts on the Sky News Money Panel had mixed feelings on the results and risk of triple-dip, ahead of the results.
Ross Walker, UK economist at RBS Global Banking & Markets, said: "I think a formal triple-dip will be narrowly avoided.
"The early signs of chaos around the January snow fall threatened to tilt the balance of risks the other way but, anecdotally, the disruption to the wider economy does not seem as bad as initially feared."
James Daley, money editor at Which?, added: It's quite possible that Britain is heading for a triple dip recession - though I think the importance of this could be overplayed.
"The economy has effectively been flatlining for almost four years now - with the odd quarter or two of growth quickly offset by a few quarters of contraction.
"Sadly, there are still no greenshoots of recovery, and with many of the public sector cuts still working their way through, 2013 looks set to be another tough year for consumers."
Asked how the retail sector could be improved, Louise George from Peter Popple's Popcorn, added: "(The Government) could offer more funding and support for small and medium-sized enterprises.
"So that they are able to grow their businesses and are able to offer lower prices to consumers through economies of scales of having more cashflow."
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