Gordon Brown has imposed a pay freeze on all Government ministers to send a message of restraint to public sector workers at a time of increased economic uncertainty and rising inflation.

Downing Street said that the decision that ministers would forgo their pay rises this financial year was announced by the Prime Minister at today's Cabinet meeting and agreed by all those around the table. Secretaries of State approved the decision on behalf of their departmental ministers, who will also be affected.

The gesture will be matched by David Cameron, leader of the Opposition, and those senior Conservatives who are on the ministerial payroll.

Mr Brown has also rejected a recommendation from a review into Westminster pay that would have seen MPs receive an additional £650 “catch-up” payment on top of their annual pay rises for each of the next three years.

Ahead of a vote on MPs salaries in the Commons on July 3, he also rejected a proposal from Sir John Baker’s review that their pay should be linked to the three-month average public sector earnings index, and said that they should instead rise in line with the mid-point of a basket of public sector settlements.

With some settlements yet to be negotiated, it is not clear exactly what rise this would produce for MPs in 2008/09, but it is thought likely to be in the order of 2 per cent.

Mr Brown accepted recommendations from the Senior Salaries Review Body for pay rises next year of 1.5 per cent for senior civil servants, 2.2 per cent for senior military officers and very senior NHS managers, and slightly over 2.5 per cent for judges.

The enforced belt-tightening for ministers was announced shortly after the Bank of England confirmed a rise in inflation to 3.3 per cent and gave warning that it would hit 4 per cent later this year.

Ministers’ pay is normally linked to the rise in average increases in senior civil service salaries. A 1.5-per cent rise next year would have meant approximately £1,900 more for Mr Brown, £1,200 for Cabinet ministers and £500-£600 for lower-ranking ministers.

The pay restraint applies only to the portion of salaries related to their ministerial jobs, however. They will receive the same rise as other MPs in their £61,181 salary for being a constituency MP.

A spokeswoman for Unison, which represents 1.3 million public sector workers, including 800,000 local government employees on an average wage of £13,000 a year, said: “It is all very well ministers giving up their pay increase, but this is small comfort to millions of public sector workers who are faced with an effective three-year pay cut.

“Those earning an average wage of £13,000 will wonder why a high court judge can be offered a pay increase of over £3,000, when they have to make do with a few hundred pounds.

“Low paid workers have to spend a much higher proportion of their income on essentials like food and fuel so are having to make hard choices about what to go without - something a judge will never have to do.”

High Court judges are paid £165,000 a year so their 2.5-per cent rise is worth more than £3,000. Unison is balloting its local government members on strike action in protest at a 2.45-per cent pay offer, which has already been rejected by workers. The ballot result is due later this week.

But Mr Brown's initiative was welcomed by Matthew Elliott, chief executive of the TaxPayers’ Alliance, who said: “Freezing the pay of Ministers and MPs shows that the Government recognises the pain that ordinary families are suffering in these rough economic times.

“With millions of people having to tighten their belts, it’s only right that Westminster follows suit and tries to save taxpayers’ money. Restricting Parliamentary pay is a welcome start, but to make a real difference to the burden on taxpayers it must be followed by pay restraint throughout the public sector.”

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