Midday
Speaking at his monthly press conference, Mr Blair said the government had accepted a recommendation by the Low Pay Commission to raise the minimum wage above £5 for the first time, paving the way for a rate of £5.30 next year. The level for 18 to 21-year-olds will rise from £4.10 to £4.25.
"This will benefit 1.4 million people, especially women, and it is a powerful symbol of how this country is changing for the good," he said.
With the Conservatives closing the gap to three points in two polls, the prime minister is under pressure to galvanise Labour's core voters. The party will be looking to the minimum wage as a vote-winner at the election, widely expected to take place in May.
Mr Blair said he wanted the minimum wage to "become as permanent a symbol of the decent values that bind our society together as the NHS".
Cabinet ministers, led by the chancellor, Gordon Brown, marked the wage increase at a series simultaneous events across the country today. Posters highlighting previous opposition to the minimum wage by the Tory leader, Michael Howard, were unveiled by Labour's party strategist Alan Milburn.
The posters reminded voters of Mr Howard's pre-1997 claims that a minimum wage would cripple business, wreck competitiveness and add to the dole queue. Labour say his opposition showed a lack of judgment, and proved he would not match its commitment to future rises.
Mr Howard, however, indicated that he would not seek to reverse the planned increase in the minimum wage if the Conservatives won the forthcoming general election. "We've accepted the principle of the minimum wage, and we certainly wouldn't seek to reduce the level of the minimum wage," he told BBC Radio 4's Woman's Hour programme. "This increase is not something we would seek to disturb."
He added that raising the threshold at which workers would start paying income tax was a "high candidate" when his party decided how to spend the £4bn it has earmarked for tax cuts.
The national minimum wage was introduced in April 1999, at £3.60 per hour for those aged 22 and above and £3 per hour for 18 to 21-year-olds. A £3 per hour minimum wage was introduced for 16 to 17-year-olds last October, but apprentices are exempt from the rate.
TUC officials have called for the introduction of a £6 minimum wage by next year, but the Confederation of British Industry (CBI) has urged a "pause year" in which to assess the impact of October's above inflation rise in the minimum wage. However, the organisation's calls for restraint contrast with the huge pay rises enjoyed by many chief executives in recent years.
"The minimum wage remains one of this government's most popular policies," Brendan Barber, the TUC general secretary, said. "Employers and politicians who said that it would cause job losses have been proved wrong year in, year out." However, Mr Barber expressed disappointment that the government had rejected renewed recommendations that the adult rate should start at 21.
The British Retail Consortium says 20,000 jobs will be lost in the retailing industry alone, and similar warnings have come from the British Chambers of Commerce (BCC) as well as the CBI. A survey of 1,200 businesses for the BCC suggested 80% were opposed to a £5.30 minimum wage.
Supporters of the minimum wage say higher pay could attract some of the millions of people who, while not claiming unemployment pay, are currently out of work or "economically inactive" back into the labour market.
This, they argue, could be a source of higher economic growth because the pool of available labour would rise and the economy could expand further without running into labour shortages.
The British Prime Minister Tony Blair has announced that the minimum wage is to go up from GBP 4.85 (EUR 7.03) per hour to GBP 5.05 (EUR 7.32) per hour in October and GBP 5.35 (EUR 7.76) per hour in October 2006. The minimum wage for 18-21 year-olds, the development minimum wage will also go up from GBP 4.10 (EUR 5.94) per hour to GBP 4.25 (EUR 6.16) per hour. The rises was a recommendation by the Low Pay Commission, a government organisation responsible in the minimum wage said that the minimum wage has increased the amount of jobs in the market. 

The minimum wage started in the UK in 1998 as one of the election proposal of the Labour government and it started at GBP 3.60 (EUR 5.22) per hour. 

The Trade Union Congress said they welcome the rise, however they want the minimum wage to go up to GBP 6.00 (EUR 8.70) per hour. The Confederation of British Industry (CBI) called for a "pause year" on the minimum wage to assess the above inflation rises

Political speculators are says the announcement is to coincide with a possible general election in May this year.