Britain's finance minister George Osborne is planning to scrap national pay rates for public sector workers in his budget on Wednesday, newspapers said.
Civil servants could have their pay rates frozen from next year until they fall into line with regional private sector wages, reports said Saturday.
Treasury officials say the change is needed because public sector wages are up to 18 per cent higher in some areas than for equivalent private jobs, discouraging recruitment and investment.
Chancellor of the Exchequer Osborne will unveil his third budget on Wednesday, but is widely expected to stick to his austerity plans to slash the deficit and avoid a debt crisis.
Ahead of the budget, media have reported that Osborne will decide to cut the 50 per cent income tax for Britain's highest earners, but such a move might need funding with more austerity measures elsewhere.
The chancellor revealed last year that he was asking pay bodies to examine moving from national deals to regional pay.
Elements of the budget are often trailed in the press in the preceding days.
Business Secretary Vince Cable -- who did not confirm the reports -- said care needed to be taken over how local pay rates would be implemented to protect career progression in the civil service.
"The idea of having more flexibility in the public sector is surely right," he told BBC radio.
"What we are trying to do is to make sure that throughout the public sector there is more genuine decision-making at a local level and you have to take into account pay and conditions."
Trade union leaders condemned the reported plans.
Trades Union Congress general secretary Brendan Barber said: "Moving to regional pay will not just reduce the pay of millions of public servants, but hit regional economies outside London and the southeast as people have less to spend.
"This budget is shaping up to be a giveaway for the super-rich and a takeaway from Britain's hardest-hit regions."