The numbers account for around 28 per cent of the region's workforce, a public meeting was told on Thursday.
The government has been covering the bulk of salaries for staff who remain employed but have not physically worked since lockdown began in March.
But with the furlough scheme set to end as restrictions are eased in July, there are widespread concerns struggling business may have to lay off employees en masse because they can't afford to pay them.
Speaking at a meeting of the West Yorkshire Combined Authority (WYCA) on Thursday, managing director Ben Still said that 256,000 people across the region remained on furlough.
He said: "The impact of what those people's companies decide to do when that furlough process comes to an end will be of huge significance in terms of the economic recovery.
"We're seeing about a 60 per cent increase from last year in the numbers of businesses that are ceasing trading.
"There are major structural economic challenges that we face.
"If anything, the economic forecasts are now more pessimistic than they were before."
The likes of pubs and restaurants will be allowed to open again on July 4, though many office workers are likely to be kept at home for the foreseeable future.
It's also been revealed that public transport in West Yorkshire is now at its busiest in the middle of the day.
A huge drop in the numbers of rush hour commuters has contributed to a complete reversal in people's travelling habits, WYCA said.
Passenger numbers are around 75 per cent down on what they'd normally be, a meeting on Thursday was told, though there's been a slight increase since non-essential shops reopened last week.
Most bus routes and train services have resumed normal service across the region this month.
WYCA's director of transport, Dave Pearson, said: "The spread of when people are travelling is different to the normal.
"The busiest time on public transport at the moment is in the middle of the day.
"We're seeing a quite significant reduction in the numbers of people commuting to work at peak times. That's probably consistent with the limited (number of people) going back to office jobs.
"On Tuesday, the government announced some level of relaxation of social distancing measures. That will increase capacity a little on buses and trains."
However, Mr Pearson said that the number of passengers able to travel would be at around half of pre-lockdown levels for the rest of the summer, as keeping space between members of the public remains essential.
Local Democracy Reporting Service