The Low Pay Commission has recommended that the adult rate of the National Minimum Wage - which applies to workers aged 21 and over - should rise by 3% to £6.70.
The Commission says its aim is to advise on a rate that protects as many low-paid workers as possible without damaging jobs or the economy.
It says that with inflation now forecast at 0.5%, the recommendation, which would apply from October if accepted by the government, would be the largest real-terms increase in the minimum wage since 2007.
It would expand the estimated number of jobs covered by the main rate of the minimum wage to more than 1.4m.
Under the proposals the Youth Development Rate, for workers aged 18-20 would rise by 3.3% to £5.30 per hour, while the rate for 16-17 year-olds would go up by 2.2% to £3.87.
The Apprentice Rate, for apprentices in their first year and those aged 16-18 would rise by 2.6% to £2.80 per hour.
The maximum daily sum employers who provide accommodation can deduct towards those costs would increase by 27 pence to £5.35.
The commission's chair, David Norgrove, said: 'Sharp increases in the minimum wage would put jobs at risk – not least bearing in mind pressure on low-paying sectors and small firms.
'We do believe however that the continued recovery, and in particular the impressive growth in employment of the low paid, should this year allow a further increase in the real and relative value of the minimum wage.'