The Low Pay Commission (LPC) has recommended that the National Minimum Wage (NMW) be increased by 20p to £6.70 from October.
The LPC said if the recommendation was accepted by the government it would be the largest real-terms increase in the NMW since 2007.
It would also take it its estimated real value three-quarters of the way back to its highest ever level.
More than 1.4 million jobs would then be covered by the main NMW, half a million more than the start of the downturn in 2008 as the minimum wage has risen in relation to median earnings.
An increase of that magnitude would also lift the NMW to its highest value relative to other wages.
The move has been welcomed by the Confederation of British Industry (CBI) which applauded the decision to review the rate in-line with productivity next year.
CBI deputy director-general Katja Hall said: "The LPC has struck a careful balance. As the economic recovery cements, the commission has reconciled a desire to reflect this in pay packets while recognising that productivity growth - the key to sustainable pay rises - remains weak.
"We welcome the commitment to review next year's rise if the improved business environment doesn't materialise. The National Minimum Wage has been one of the most successful policies of our time thanks to the independent recommendations of the commission, helping many low-paid workers without damaging their job prospects.
"Any artificial increase due to political expediency will help no-one and ultimately damage one of the most successful government policies in recent years," she added.