Boris Johnson has added to mounting Cabinet pressure on Theresa May and Chancellor Philip Hammond to ease austerity by scrapping the 1% public sector pay cap.
A Government source said the Foreign Secretary wants a wage boost for public sector workers and believes the recommendations of independent pay review bodies which back increases should be followed.
Mr Johnson “strongly believes” a public sector pay rise can be done in a “responsible way” which will not put undue pressure on the public finances, the source said, with the Chancellor still aiming to wipe out the deficit by the middle of the next decade.
Pressure is mounting on the Prime Minister and Mr Hammond to relax austerity, with several Tory MPs calling for an end to the pay cap after the party disastrously lost its majority in the General Election to anti-austerity Labour, which has pledged to scrap the 1% ceiling.
Mr Johnson’s views go further than those stated by his old adversary and Cabinet colleague Michael Gove, who said the Government has “got to listen” to the pay review bodies, one of which has already recommended a pay rise for NHS workers this year.
The Government source said: “The Foreign Secretary supports the idea of public sector workers getting a better pay deal and believes the pay review recommendations are right.
“He also strongly believes the rises can be done in a responsible way and without causing fiscal pressures.”
Increasing public sector pay would boost the earnings of 5.1 million workers, including 1.6 million in the NHS and 1.5 million in public education, according to the Institute For Fiscal Studies (IFS). It is likely to cost billions of pounds.
In a Sunday broadcast interview, Mr Gove said it is the Government's "collective view" to "respect the integrity" of pay review bodies and suggested he was “suppressing” his own opinion on austerity.
In March, the NHS pay review body highlighted "widespread concerns" about recruitment, retention and motivation among employers and staff and said "we are approaching the point when the current pay policy will require some modification, and greater flexibility, within the NHS".
Health Secretary Jeremy Hunt will reportedly cite the report while demanding the pay cap is scrapped for NHS workers.
A Number 10 source has said the Government is responding to the recommendations of pay review bodies currently reporting to ministers "on a case-by-case basis".
The source said the pay cap was brought in to "deal with the mess we inherited from Labour" and acknowledged the "hard work and sacrifice" made by public sector workers, saying jobs had been protected and the deficit reduced by three quarters.
"While we understand the sacrifice that has been made, we must also ensure we continue to protect jobs and deal with our debts," the source added.
Rehana Azam, the GMB union’s national secretary for public services, said: "Mr Gove's support for public sector pay review bodies now is a bit rich after scrapping the national negotiating body for hundreds of thousands of school caterers, lunchtime assistants, dinner ladies, teaching assistants and caretakers.
"If the Tories are serious, they need to stop dithering and get on with lifting the cap on public sector pay and ensure all public sector workers get a fair pay rise.”
In his interview on BBC One's Andrew Marr Show, Mr Gove appeared to reject suggestions taxes would have to go up to pay for extra spending, declaring: "I don't see any reason why they need to."
It comes after Mr Hammond's repeated insistence that the only ways to fund extra spending are by increasing borrowing, which he does not appear to favour, putting up taxes, or increasing productivity to boost growth, seen as a more long-term goal.
Robert Halfon, the former minister who recently said his Conservative Party was "on death row" and must make dramatic changes, including a rebrand to "the Workers Party", said public sector employees should get a pay rise.
He told Good Morning Britain: "The difficulty is squaring the circle, we don't have a lot of money in our country and we still have a huge debt although the deficit has gone down quite a bit.
"(We should) temporarily, in order to meet the needs of public sector workers, we should cut our overseas aid budget money in order to ensure they get the pay increases they need.
"What I'm saying is temporarily, I'm not saying this should be forever, let's use part of the overseas aid budget to make sure those in the public sector workers - who are guardians of our nation - the raises they need."
Conservative MP Maria Caulfield, a former nurse, said she had found the pay cap "extremely difficult" and most nurses worked extra shifts to make ends meet.
She told BBC Radio 4's Today programme: "It's a difficult, stressful, responsible job and if people aren't paid enough so they can make ends meet they will go and do something else.
"I think there is resentment building and not just in nursing, but across the public sector, that frontline staff have carried these services for the last seven years and if there is no recognition of that and no pay coming forward to recognise that then that's when the resentment builds," she added.
Tory former work and pensions secretary Stephen Crabb said Ms Caulfield had made a "compelling" case for a pay hike.
He said: "Compelling case for a pay increase for nurses being made @BBCr4today by Conservative MP & nurse @mariacaulfield."
Conservative former chancellor Lord Lamont said it was wrong for Cabinet ministers to "gang up" on Mr Hammond.
He told BBC Radio 4's Today programme: "I think it is not right for Cabinet ministers to gang up on the Chancellor in this way.
"I think it is making his position, which is always very difficult, very very awkward indeed."
The Tory peer said austerity was "just another word for living within ones means".
"It's not really austerity," he added.
"People are talking about austerity as though it were an issue of too many repeats on television or they had got tired of watching Poldark and wanted a better programme
"This is not a choice. It is unavoidable that we have restraint on public spending."