It was an embarrassing admission for Brazil's president, Luiz Inacio Lula da Silva, who had said his government's efforts to control illegal logging and introduce better certification of land ownership were working.
The figures also focussed attention on the fate of the Amazon rainforest, raising the question of whether the region can be economically developed without being destroyed.
"Deforestation is linked to economic factors," says Paulo Barreto, senior researcher at Imazon, a non-governmental organisation, in his offices in Belem, the capital of the Amazonian state of Para.
"Seventy-five per cent of the deforestation in the Amazon is to create cattle pasture," says Mr Barreto.
"Brazil has become over the last five years the world's leading beef exporter. All the expansion of the cattle industry in the last few years has been in the Amazon."
This report is part of a BBC World Service special on the Amazon rainforest.
There will be a series of live and recorded broadcasts starting at 0500GMT on Thursday 15 May.
Highlights will include a double edition of Newshour, presented live from three locations in Brazil at 1200 and a one hour special at 1600.
As demand for beef and soybeans grow in the rapidly growing economies of Asia, in particular China, many observers fear the pressure on the rainforest will continue.
The Brazilian federal government was sufficiently worried about the recorded 2007 rise in deforestation to launch a large police operation in February. Thousands of officers were sent to some of the worst-hit areas to tackle illegal logging, closing down sawmills and issuing fines.
But some say such operations fail to address endemic problems of the region.
"Fraud in the land registry system is a big problem." says Paulo Barretto.
"Collecting fines for deforestation are at very low levels. The environment ministry thinks the psychological impact of receiving a fine will be enough, but they are never collected. "
But with Brazil's increasingly important role on the world stage as a major agricultural power, a new pragmatism is emerging.
Some projections suggest that 40% of the forest could be lost by 2050
"We will have to discuss environmental sustainability in the Amazon in a new way, " said Brazilian environmentalist and former congressman Fabio Feldman in a debate in early April on Globo TV.
"The Amazon is providing environmental services for the world and we must find a mechanism which can compensate agribusiness so that they do not deforest."
In the state of Amazonas, which has suffered much less deforestation than some other parts of the region, the authorities are launching a scheme which could hold the key to solving the paradox of how you marry economic development and environmentalism.
Under the scheme, in return for around $30 a month, families are asked to protect the environment and endangered animals and fish, and not to sell wood.
The scheme is initially for families in local conservation areas but could be rolled out further afield. The plan is also being looked at with interest by other Amazonian countries in the region.
The Amazon rainforest
Largest continuous tropical forest
Shared by nine countries
65% Brazilian territory
Covers 6.6m sq km in total
Pop: 30m - 23.5m are in Brazil
Elsewhere in the Amazon region international concerns are pushing farmers and producers to take into account the environment in a new way as they seek international lines of credit to modernise and become more efficient.
"Brazil has plenty of abandoned land that could be put to good use instead of cutting down the rainforest, " says Erai Maggi, one of the world's biggest soya farmers with lands in the south of Mato Grosso state.
"We need better infrastructure here, then we could become even more efficient and help improve world food stocks which are at a 30-year low. Currently to export we have to take our soya 3,000km down a bad highway to the ports in the south of the country."
Far to the south in, the capital Brasilia, the federal government has come up with more ambitious proposals, including the controversial creation of an economic zoning plan.
Brazil may divide the Amazon into regions of different economic activities
This would divide the Amazon is divided into regions of different economic activities.
All this would take time. Meanwhile, the Brazilian government's space research institute, INPE, has been developing satellite surveillance systems that show month by month pictures of deforestation which in theory should make it easier to catch the perpetrators of environmental crimes and help slow deforestation rates.
Nevertheless, future scenarios for the Amazon still look dire.
Pessimistic projections suggest that if the current rate of deforestation continues, with little policing or punishment for deforesters, 40% of the forest will be gone by the year 2050.
If the government makes its conservation areas work and punishes deforestation, as well as investing in reforestation and the re-use of areas already stripped of their forest this figure could be reduced to a loss of only 27%.
At the very best with good projects to reduce deforestation and paying people not to cut forest, Brazil might be able to keep the loss down to 20%.