Unions are up in arms against the government after ministers accepted the recommendations of pay review bodies that put forward an average 1% pay hike in basic pay for public sector workers in 2017/2018.
Ministers had urged a below inflation deal to "help repair the public finances."
The announcement however did not go down well with unions, which questioned why MPs are set to enjoy a 1.4% pay hike from next week, when civil servants were "limited to 1%".
"The pay of top judges and MPs has already breached the government's 1% limit," Unison general secretary Dave Prentis said. "It's high time ministers stopped penalising NHS employees and gave them a decent pay rise."
A Prime Minister's official spokesman told the BBC that both pay increases were determined independently. "These are all put forward by independent pay review bodies," he said.
The Treasury said that continuing wage restraint in the public sector, which also applies to Northern Ireland would help to protect an estimated 200,000 jobs.
"The settlement for these key workforce protects jobs and helps repair the public finances," David Gauke, the chief secretary said, reports BBC.
The Armed Forces' Pay Review Body, the NHS Pay Review Body and the Doctors' and Dentists' Remuneration Body made the recommendations which are in line with the UK government's policy of a 1% pay cap for key workers until 2019-2020.
The NHS Pay Review Body however noted that the pay policy was coming "under stress" with shortages of staff in certain sectors and in parts of the country.
"Our judgement is that we are approaching the point when the current pay policy will require some modification, and greater flexibility within the NHS," the body said.
Union says pay freezes and caps demoralising workers
Union however criticised the pay hike, saying that seven years of pay freezes and caps were demoralising workers and harming recruitment.
The pay awards recommendations have also been accepted by both the Scottish and the Welsh governments but they both have said that there will be additional help offered to thousands in the lowest paid category.
Christina McAnea, the head of health at Unison said: "This deal amounts to less than £5 a week [rise] for most midwives, nurses, cleaners, paramedics, radiographers and other healthcare staff. It's a derisory amount in the face of soaring fuel bills, rising food prices and increasing transport costs."
She warned that the NHS staff crisis will only worsen as "people leave for less stressful, better rewarded jobs elsewhere."
Rehana Azam from the GMB union said: "Theresa May talks about helping those who are 'just about managing' but it's clear that she doesn't include over five million public sector workers."
Janet Davis, the secretary general of the Royal College of Nursing said that the pay hike was a "bitter blow" and that it will deter new people from joining the nursing profession, Sky News reports.