"I ask the government and the parliament to agree quickly on the best options and ... the measures necessary to make available real resources so that we can go ahead with implementation with effect from May," he said.

Political move

Ashraf Al Arabi, Egypt's tax commissioner and deputy finance minister, said the pay raise would be across the board.

He said that the government's intention is to find additional revenue, in order to keep a check on the national budget.

"Things are going to happen in the upcoming 10 days. The government and the parliament will sit down for a dialogue to find real resources," he said.

Mubarak's proposal could help weaken support for a general strike on Sunday, proposed by disgruntled workers and the Muslim Brotherhood, Egypt's main opposition party.

Mubarak also proposed an overhaul of Egypt's subsidies policy, which, according to him, was weighing heavily on the government budget.

"These fuel subsidies go to those who can pay rather than to those who cannot. This requires a review of the correct situation, but gradually," he said.

Limited impact

Commenting on the salary revision, Reham El-Desoki, senior economist with investment bank Beltone Financial, said its impact on inflation would be limited as civil servants had little purchasing power.

"Most government employees are so underpaid that a wage increase of this magnitude is overdue," El-Desoki said.

"They have a right to start banging their fists against the wall and demanding higher pay because they are getting peanuts."

Mubarak's government went on the defensive after a wave of protests against growing prices and low salaries.

Bread and grain prices in Egypt have risen by 48.1 per cent, fruit and vegetable prices by over 20 per cent and edible oils by 45.2 per cent.

Urban inflation in Egypt touched 14.4 per cent in March 2007, the highest in three years.