Chancellor Jeremy Hunt is expected to use his speech to Tory party conference to confirm an increase in the national living wage to at least £11 an hour from next April.
The Conservatives said the move will benefit two million of the lowest paid, with Mr Hunt also expected to announce ministers will look again at the benefit sanctions regime in a bid to get the unemployed back into work.
It comes as Rishi Sunak resisted calls from fellow Tories to commit to tax cuts in a pre-election giveaway and vowed to prioritise reducing inflation rather than taxes.
Cabinet minister Michael Gove was among those calling for tax cuts before the next election, while former prime minister Liz Truss is among dozens of Tory MPs who have said they will refuse to vote for new tax rises.
The Government had already set a target for the national living wage to reach two-thirds of median hourly pay by October next year.
The Low Pay Commission estimates the rate required to meet that target should be between £10.90 and £11.43, with a central estimate of £11.16.
Mr Hunt is expected to say: “That’s the Conservative way of improving the lives of working people. Boosting pay, cutting tax.
“But today, we go further with another great Conservative invention, the national living wage.
“We promised in our manifesto to raise the national living wage to two-thirds of median income – ending low pay in this country.
“At the moment it is £10.42 an hour and we are waiting for the Low Pay Commission to confirm its recommendation for next year.
“But I confirm today, whatever that recommendation, we will increase it next year to at least £11 an hour.
“A pay rise for over two million workers.
“The wages of the lowest paid over £9,000 a year higher than they were in 2010 – because if you work hard, a Conservative Government will always have your back.”