Millions of public sector workers including nurses, doctors and teachers have been offered pay rises of between 3.6% and 4.5%.
It comes after the government accepted recommendations from pay review bodies higher than the 2.8% it previously budgeted for.
Unions had threatened action if pay awards were not increased, arguing 2.8% was too low.
But the Treasury has previously said rises above this will have to be funded through savings from existing budgets.
In a series of announcements, the government confirmed NHS workers in England on Agenda for Change contracts, covering most staff apart from doctors, dentists and senior managers, have been offered rises of 3.6%.
Doctors and dentists have been offered 4%, as well as teachers in England and prison staff. Members of the armed forces have been offered 4.5%.
The education department has announced an additional £615m to cover the rises, but said schools would be asked to partially fund the awards through “improved productivity and smarter spending”.
Education unions have welcomed the rises, but warned that without more funding school budgets would suffer.
The health department said cuts to “frontline services” would not be necessary, arguing the money could be found through cutting the use of temporary staff, cutting “duplication and waste”, and its plan to abolish NHS England.
Recommended awards of 3.25% for senior NHS managers and senior civil servants have also been accepted by ministers.
Inflation – the rate prices are increasing – has fallen in recent months, but unexpectedly rose to 3.5% in the year to April, potentially complicating how ministers sell the deals to workers.
The Bank of England has previously said it expects inflation to peak at 3.7% between July and September this year, before slowly falling.
Labour ended long-running public sector strikes last summer by accepting recommended pay rises between 4.75% and 6% for last year.
Ministers argued the move was required to stop damage to the economy – but it led to Conservative accusations they had lost control of public sector pay.
