A new minimum wage of £3 an hour is to be introduced in October for 16 and 17-year olds, the government has announced.

The move follows a recommendation from the Low Pay Commission.

"The Commission has concluded, first, that the overall economic outlook remains favourable, with growth being slightly higher than forecast last year and the labour market remaining robust with high employment and very low unemployment," said a statement.

"In addition, employment across low-paying sectors as a whole is continuing to grow and there seems to be little or no evidence that the minimum wage is having an adverse impact on these sectors.

"On the basis that the commission believes these recommendations are affordable for business and will not have any significant effect on levels of employment."

It will also result in an increases in the wage for over 21s from £4.50 to £4.85, and an increase from £3.80 to £4.10 for those aged between 18 and 21.

The move has been welcomed by trade unions, despite repeated calls for a £5 minimum rate.

"Unions will be delighted that their campaigning has paid off," said TUC general secretary Brendan Barber.