More than one million NHS staff, including nurses, porters and paramedics, can expect pay increases of at least 6.5% over three years - with some rises being as high as 29%.
The deal has been formally agreed by unions and ministers on Wednesday and could cost as much as £4bn.
Pay rises will be backdated to April this year, if staff agree to the deal.
The deal is tiered - with the lowest paid workers in each job receiving the biggest rises.
The agreement covers all staff on the Agenda for Change contract - about 1.3m across the UK - which is the entire workforce with the exception of doctors, dentists and senior leaders.
The agreement is complex. It says that:
half will get a 6.5% pay rise over three years
the other half will receive rises of between 9% and 29%
the lowest full-time salary - paid to the likes of cleaners, porters and catering staff - will rise by 15% to more than £18,000
these groups will get an immediate £2,000 rise this year
a nurse with one year's experience would see their basic pay rise by 21% over three years, giving them a salary of up to £27,400
the deal includes a commitment on both sides to reduce the high rate of sickness absence in the NHS
Sara Gorton, lead negotiator for the 14 health unions, said: "It won't solve every problem in the NHS but it will go a long way towards making dedicated health staff feel more valued, lift flagging morale and help turn the tide on staffing problems."
Danny Mortimer, chief executive of NHS Employers, said "compromises" have had to be made but he predicts the deal will make the NHS a "desirable" employer once again.
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Inflation is forecast to be 2.4% in 2018, then 1.8% and 1.9% in the following two years. So in real terms, the minimum increase over three years is expected to be small.
It will be up to the devolved governments to decide whether to implement the deal outside England.
Scotland has already given its lowest paid staff bigger rises, so there could be some divergence in how the terms are introduced elsewhere.
