After seven years of tightly controlled public sector pay, police and prison officers will be the first to benefit from the new position after the government agreed to accept the recommendation of independent pay review bodies for increases above the 1 percent cap.
However, with other public sector workers having to wait longer for any increases, unions now meeting this week for their annual congress have warned industrial action could follow as a "last resort".
Last year, Britain passed tough laws which require a ballot turnout of more than 50 percent of union members for a strike to be legal, with even tighter restrictions for important public services such as health, transport, border security and fire sectors.
Police will get a 1% pay rise plus a 1% bonus for the year, while prison officers will get a 1.7% rise, the government announced on Tuesday.
He was unable to comment on how much the move will cost the public purse, although said both increases would be funded from existing departmental budgets.
"The government takes a balanced approach to public spending, dealing with our debts to keep our economy strong, while also making sure we invest in our public services".
Treasury minister Liz Truss said that hard working public sector workers deserved to be "fairly rewarded" and that special consideration was to be given to areas of the public sector where there were staff shortages.
Four unions tabled motions to this week's Trades Union Congress in Brighton calling for some kind of nationally coordinated action, which were then included in a composite motion.
Despite the cap being lifted these pay rises are still lower than the rate of inflation.
The federation had asked for a 2.8% increase to basic pay, while the Prison Officers Association had called for a 5% increase.
Steve White, chairman of the Police Federation of England and Wales, said the announcement would leave many officers "angry and deflated".
Chief Constable Francis Habgood, of the National Police Chiefs' Council, said forces had budgeted in line with the 1% cap until 2020, adding that without extra government funding the latest award would "inevitably impact on our ability to deliver policing services and maintain staffing levels". Yesterday, the Prime Minister's spokesman said it would continue as planned.
"This below-inflation pay offer is pathetic", she said.
Leaders of unions representing millions of workers said they will continue campaigning for wage rises.
"For seven long years the Government's harsh pay cap has been hurting public sector workers, their families and the services they provide".
Mr Corbyn denounced the Government's announcement as an attempt to play "divide and rule" with public sector workers, and promised that Labour would ditch the cap across the board.
Unison said it was a "tiny step in the right direction but not almost enough".