The Civil Service Association represents 2,000 civil servants

Their pay increase this year will be 2.5%, which is 1.2% lower than the cost of living as it stood in March.

They have also agreed to accept a pay deal in 2005 which is 1% below the retail price index of next March.

The Civil Service Association, which represents 2,000 civil servants, said it was playing its part in helping the States control its spending.

John Moulin, chairman of the joint executive for the Civil Service, said it was important staff took part in the change process.

He said: "It's vitally important that we do participate because unless we are out there with the change process, it is no good moaning when things have happened."

Policy and Resources president, Senator Frank Walker, said he was pleased an agreement had been reached and that the Civil Service had demonstrated its commitment to the States policy to cut public spending.