The minimum wage rose by 30p to �5.35 an hour in October last year

The rate of growth in the minimum wage should be no faster than that of average earnings, the foundation's assistant director David Coats said.

The minimum wage has risen at a faster rate than average pay in recent years and now stands at �5.35 for over-22s.

However, unions are calling for a �7-an-hour minimum for adult workers.

The government is expected to reveal whether the minimum wage will increase, and if so, by how much.

'Threat'

Mr Coats - who used to advise the government on the minimum wage and was a member of the Low Pay Commission - said a settlement of �7 per hour would "certainly" become a threat to employment.

"There is no doubt that once you go above a certain point, there will be some adverse impact on employment. I think �7 is certainly above that level," he told the BBC.

"I think the time has now come for some consolidation, maintaining the real value of the minimum wage and seeing how that is bedding down and then making a further judgment on whether a rise is possible in 2008/09."