The Defence Secretary said improved pay was one of her priorities (Picture: MOD).
Two million public service workers including the Armed Forces are reportedly set to be given a £2 billion pay rise.
The Times reports that soldiers will receive an increase of 2.9%, while police officers and dentists/consultants will both receive a 2.5% pay rise.
Meanwhile, teachers and school staff are expected to receive a 2.75% rise and civil servants 2%.
The newspaper suggests the Treasury will unveil the biggest public sector boost for six years on Monday before Theresa May's tenure as Prime Minister comes to an end.
Speaking to Forces News on Thursday, the Defence Secretary Penny Mordaunt said improved pay was one of her priorities before the new Prime Minister is announced.
Public sector pay rises were capped at 1% after the Conservative-led coalition came to power in 2010. Theresa May then continued with the cap until last year.
Jonathan Cribb, a senior research economist at the Institute for Fiscal Studies, told the Times: "These public sector pay rises are higher than last year's and considerably higher than the 1% for many years before that.
"It is the highest nominal pay increase since the coalition. But these increases are still slower than pay rises that are happening on average in the private sector.
"With the partial exception of schools, there seems to be no new money to fund thesepay rises, meaning savings will have to be made elsewhere."
The new pay rises are expected to be funded by existing budgets.
Last month, Labour leader Jeremy Corbyn vowed to give "fair pay" to the military and end privatisation in the Armed Forces.