MPs and ministers are to receive an inflation-busting annual pay rise of 2.5 per cent next month.

And on top of the rise, they will receive the second half of a £4,000 additional boost to their salary which they voted themselves last year, bringing the total pay packet of MPs, such as Hartlepool's Peter Mandelson, to £55,118.

The annual rise is almost double the current headline inflation rate of 1.3 per cent.

Tony Blair's additional entitlement as Prime Minister rises by 2.5 per cent to £116,436, on top of his parliamentary salary as MP for Sedgefield, making a total £171,554.

Cabinet ministers, such as Transport Secretary Stephen Byers, will see their entitlement rise by the same percentage to £69,861, with those who are also Members of the Commons receiving their MPs' salaries - a total of £124,979.

MPs' and ministers' salary rises are automatically linked to the increases for senior civil servants recommended by the Senior Salaries Review Body.

Mr Blair announced in a written parliamentary reply that he had accepted the body's recommendation of a 2.5 per cent hike from April 1 for senior civil servants and senior military officers.

But he decided to stage the eight per cent increase recommended for judges, who will receive 3.6 per cent this year and the remaining 4.4 per cent in April next year.

The review also includes a massive increase in the maximum salary available to the senior civil servants who head each Government department, in a bid to make the posts attractive to high-fliers from the private sector.

The reform of senior pay will mean future permanent secretaries could earn as much as £245,000 a year, compared to the maximum £179,000 now.

In fact, no permanent secretary will earn more than £200,000 next year, said the Cabinet Office, which added that the reform was designed both to encourage recruitment from the private sector and to "reward people properly" for their contribution to the public services.