A historic deal has been agreed that will see more than one million NHS workers receive a minimum 10% pay rise over the next three years.

Health unions and the government have reached the UK-wide agreement on a new pay system, covering nurses, technicians and ambulance staff.

The deal, which could see some staff receiving significantly higher pay rises, could cost up to �3.3 billion.

Under "Agenda for Change", new pay bands will be linked to "job evaluation" which will be introduced in addition to the across-the-board rise over the next three years.

They will replace a myriad of different pay structures which have been described as archaic by both unions and government.

It is about paying more to get more

Alan Milburn, Health Secretary

The deal is linked to changes in working practices which the government says will "modernise" the NHS, such as keeping operating theatres open 24 hours a day, seven days a week.

Health Secretary Alan Milburn said: "Agenda for Change is the most radical modernisation of the NHS pay system since its foundation in 1948.

"In essence, it is about paying more to get more, so that staff who take on new responsibilities get extra rewards."

He added: "Agenda for Change proves that negotiation works. This is a something for something deal.

"It is a fair deal for NHS staff and a good deal for Britain's NHS."

Extra pay

Once Agenda for Change is introduced, NHS staff will earn a minimum of �5.16 per hour, equivalent to �10,100 a year.

Newly qualified, or grade D, nurses will see their pay rise from �16,005 to �17,000.

Those at the top of that grade, who can currently earn up to �20,665, could earn up to �22,000.

All staff, regardless of profession, will work a 37.5 hour week.

It would definitely be a step forward and a basis for a long-term agreement

Dan Hodges GMB union

Staff working in London, and those in "hard-to-recruit" professions will see additional pay rises.

The deal will solve a particular problem in nursing, where long-serving staff can become "stuck" at the top of their grade, but will now get rises reflecting their experience and service.

Subject to consultation, it will be introduced in 12 pilot sites next April, and then across the country in 2004.

Doctors and managers will continue to negotiate their pay separately.

The package was being thrashed out by representatives from 17 NHS professions and the Department of Health.

Deficit

Beverley Malone, general secretary of the Royal College of Nursing, told the BBC: "Nurses are due a substantial increase and it will make a great difference in terms of recruitment, and also in terms of retention."

Dan Hodges of the GMB union said the pay rise was linked to modernisation, but believed it could mean an end to perennial battles over low NHS pay.

He told BBC Radio 4's Today programme before the deal was officially announced: "It would definitely be a step forward and a basis for a long-term agreement.

An NHS catering assistant earns less than the equivalent staff member at McDonald's

Evan Harris MP, Liberal Democrats

"Obviously though, there is still a deficit to be made up, because many health workers remain the lowest paid in the country, and still do a very difficult and important job."

The settlement could ignite the firefighters still further as they continue to push for a "significant" pay rise.

Liam Fox, Shadow Health Secretary, said: "The success of any settlement will be judged not only by whether it increases staff numbers bit whether it does so effectively across a wide skill base, with sufficient regard to specific geographical needs."