The adult national minimum wage (NMW) has been increased from 5.52 to 5.73, enforceable from October this year.

Gordon Brown announced the rise in yesterdays (Wednesday) Prime Ministers Questions. He also stated that the NMW for 18-21 year-olds would increase from 4.60 to 4.77, while those aged 16-17 can expect a rise from 3.40 to 3.53.

Brown says nearly one million low paid workers will benefit, two thirds of whom are female.

Government will also increase funding for the enforcement of NMW, and is planning tougher penalties, as part of the Employment Bill, for employers that do not comply.

The changes come in response to a report by the Low Pay Commission (LPC), which advises government on the national minimum wage.

This increase means that the minimum wage will have risen by 59% since it was introduced in April 1999 - almost double the expected growth in prices over the same period, says the LPCs chairman, Paul Myners.

Business leaders are happy with the increase too.

We welcome this moderate approach, says John Cridland, CBI deputy director-general. Over the last few years the Low Pay Commission has taken the right stance by not increasing the minimum wage by more than the growth in average earnings, while also taking into account the prevailing economic climate and firms' ability to pay.

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