Chancellor Sajid Javid has pledged to raise the National Living Wage (NLW) to £10.50 within the next five years.
Speaking at the Conservative Party Conference, the Chancellor also said he would lower the qualifying age for the NLW from 25 to 21.
The current rate for over 25s is £8.21. The Living Wage Foundation says the NLW should already be £9 across the UK and £10.55 for workers in London.
The announcement came as Mr Javid confirmed a number of spending plans, including £25 billion for road projects and £220 million for bus improvements. In addition, he said there will be £5 billion for digital infrastructure, along with £500 million extra funding for youth services.
Speaking at the conference, Mr Javid said: 'In 2016, we introduced the NLW, giving Britain's workers the biggest pay rise in two decades. In April, we increased the rate again, making 1.8 million workers better off, putting the number of low paid workers at its lowest level in four decades.
'Over the next five years, we will make the UK one of the first major economies in the world to end low pay altogether.To do that, I am setting a new target for the NLW: raising it to match two-thirds of median earnings.'
The minimum wage is paid at an hourly rate, with payment bands depending on age, and special provisions applying to apprentices. The NLW is the minimum wage for those aged 25 and over, whilst the National Minimum Wage (NMW) applies to those above school leaving age and individuals aged under 25.