The 6.6% pay rise for workers aged 23 years old and over is expected to be announced in the Budget.
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The National Living Wage is set to rise from £8.91 per hour to £9.50 in the Budget, the BBC has been told.
This is a 6.6% increase in the minimum wage for all those aged 23 and over – more than twice the current consumer price inflation rate of 3.1%.
The government has come under pressure to help low-paid employees and younger workers, who are among the worst hit by the Covid pandemic.
The rise was as recommended by campaign group the Living Wage Foundation.
Employers often worry that a higher minimum wage will lead to more unemployment, as they will be forced to lay off workers in order to afford the increases.
But independent experts maintain there has been little or no evidence of job losses as a result of rising minimum wage levels.
The move comes as households face an economic squeeze from the soaring cost of energy and rising consumer prices.
The Bank of England’s chief economist, Huw Pill, has warned that UK inflation is likely to hit or surpass 5% by early next year, leading analysts to predict that interest rates could go up as early as next month.
Chancellor Rishi Sunak is also eager to begin balancing the books after the strain of financing pandemic emergency measures, with higher taxes likely to be in the offing.
Measures to trim public spending have already begun with the end of the £20-a-week temporary increase to universal credit payments, which was brought in at the start of the pandemic and withdrawn again earlier this month.