Chancellor Sajid Javid has announced the official "living wage" will increase to £10.50 an hour under new plans - meaning four million people will get a pay rise
The current compulsory living wage is £8.21 an hour. In effect, this is the legal minimum wage for workers aged 25 and over.
But the Tories will increase this to £10.50 - and extend it to cover every worker aged 21 and over.
Mr Javid did not reveal exactly when the increase would come into effect, and appeared to suggest it could take as long as five years.
However, he said the living wage would be fixed to at least two thirds of median earnings, and will automatically increase over time as wages increase generally.
Speaking at the Conservative conference in Manchester, Mr Javid, the MP for Bromsgrove, said: "Over the next five years, we will ... end low pay altogether.
"To do that, I am setting a new target for the National Living Wage, raising it to match two-thirds of median earnings That means, on current forecasts, this ambitious plan will bring the National Living Wage up to £10.50, giving four million people a well-earned pay rise.
"And to help the next generation of go-getters to get ahead, we will reward the hard work of all millennials too. By bringing down the age threshold for the National Living Wage to cover all workers over the age of 21."
Labour has said it plans to increase the compulsory living wage to £10 an hour and would also extend the living wage to every worker, including those aged under 21.
At the moment, the minimum wage for younger workers is £7.70-an-hour.
