Nurses and other workers were today offered a three-year pay deal guaranteeing salary increases until 2011.
The government deal is worth 2.75 per cent from April 1st 2008, rising by 2.4 per cent in 2009/10 and 2.25 per cent in 2010/11.
This is worth 7.99 per cent in total over the three years.
Changes to the pay structure in years two and three will give extra financial support for the lowest paid workers and allow quicker career progression, the government said.
The deal is aimed at preventing NHS industrial action over pay.
Health secretary Alan Johnson said today's announcement recognises the "tremendous efforts" of NHS staff.
"A multi-year deal ensures security for staff and allows them to plan for their future and the future of their families," he added.
"I would like to thank the NHS Employers and unions for their positive approach to negotiations. I believe we have worked towards achieving a fair and affordable deal that is good for staff, the NHS and patients."
Mr Johnson also announced a 2.2 per cent increase for hospital doctors and hospital doctors and dentists in training; and a 3.4 per cent increase in the gross earnings base for general dental practitioners (GDPs).
The proposed pay package will now be consulted by members of all the trade unions covered by NHS Agenda for Change.
The Royal College of Nursing (RCN) said it is "delighted" to put its name to the proposals, particularly the opportunity to reopen talks should the economic situation change.
"We have long argued that fair pay and decent conditions are vital to keep experienced nurses in the profession, while attracting much needed new blood," said RCN general secretary and chief executive Dr Peter Carter.
"Given the uncertain economic climate and the government's tough public sector pay policy, this package, worth 7.99 per cent over three years, is better than expected and goes some way towards bridging the gap between nurses' pay and other public sector workers.
"We will now be consulting our members for their views on this proposed agreement. Details of the RCN's consultation will be announced shortly."