There is no evidence that the minimum wage has had any adverse economic or employment effects

John Monks, TUC

Trade and Industry Secretary Patricia Hewitt said the higher rates would make a "real difference" to about 1.4 million workers, mainly women, across the country.

Unions have welcomed the increase as "great news".

But business leaders have reacted more cautiously to the rise, warning that it adds to the burden companies face in times of economic uncertainty.

Protecting workers

Ms Hewitt said the increase was "good news" for decent employers, and that it would also "prevent unscrupulous bosses using poverty wages to undercut their competitors".

The Department of Trade and Industry maintained the increases would have a "negligible" effect on the country's total wage bill.

John Monks, general secretary of the Trades Union Congress, welcoming the rise, added that the government was right to reject calls from some business leaders for the increase to be postponed.

Ministers must now commit themselves to regular and predictable increases

Low Pay Unit

"It is a modest increase - less than the rise in average earnings and well below boardroom increases," he said.

"There is no evidence that the minimum wage has had any adverse economic or employment effects."

But business group the Confederation of British Industry, which had warned that any rise in the minimum wage above �4 would be "particularly damaging", gave Monday's incease a more cautious welcome.

"We accept this increase, which should ensure that the wage does not wither on the vine," a CBI spokeswoman told BBC News Online.

"But the rise will still not be easy for many small firms and that will be particularly true in the current uncertain economic climate."

'Regular increases'

The TUC's John Monks also expressed disappointment that the government continued to reject calls for 21-year-olds to receive the full adult rate.

And a spokesman for campaign group the Low Pay Unit said: "This increase is good news for millions of low paid workers but only maintains their level earnings in relation to average pay.

"Ministers must now commit themselves to regular and predictable increases."

He said that since next year's increase would be only 10p, the real value of the minimum wage would fall again.