London's Living Wage must increase by 25p an hour, to £8.55, Mayor Boris Johnson has announced, worth an extra £4.5m to workers on low wages.
The Living Wage outside London will also rise by 25p to £7.45, compared to the national minimum wage of £6.19.
The Living Wage Foundation will, from Monday, be awarding a "kitemark" to employers who pay the Living Wage - and said it hoped the mark would become as recognisable as the Fair Trade logo.
The Greater London Authority, Barclays Bank, Lloyds of London and KPMG are some of the largest companies who pay their employees and contractors the Living Wage. Lord Coe pledged in 2010 that all those working on the London 2012 Olympics would be paid the Living Wage too.
But most government departments, including the Department for Work and Pensions, still pay their cleaners lower than the London Living Wage.
High-profile campaigns have also called for the Living Wage to be paid by the Tower Of London and John Lewis, where striking cleaners from contractor ICM won a 10 per cent pay rise, back-dated to March this year.
Buckingham Palace also agreed last year to give workers a pay rise, after it emerged many were earning well below a Living Wage, according to the Daily Mirror.
Johnson said during a briefing to local authorities, charities and employers, who already pay their employees the Living Wage, that the standard helped to build "motivated, dedicated workforces".
Boris Johnson - launching the increase in the Living Wage
He added: "The Living Wage helps businesses to boost the bottom line and ensures that hard-working people who contribute to London's success can enjoy a decent standard of living."
"Despite very challenging economic times, it's clear that more employers are waking up to the huge benefits that paying the Living Wage delivers.
"We have a great range of household names on board and I want to see more coming forward."
Since the Living Wage was introduced in 2005, an estimated 11,500 workers have benefited.