Sutton Council has made a U-turn to guarantee all its workers the London Living Wage.
Companies and organisations that sign up to the London Living Wage, backed by London mayor Boris Johnson, guarantee to pay staff a minimum of £8.80 an hour - seen as the minimum a Londoner needs to live on plus a small amount more to spend.
It equates to a salary of just over £15,000-a-year for someone who works 35 hours each week.
Last year, Liberal Democrat Councillor John Drage said Sutton Council could not afford to pay the London Living Wage as it would mean staff having to lose their jobs to cope with the extra costs.
But, after pressure from Conservative and Labour Councillors, Sutton's Liberal Democrats had a change of heart and pledged to give all the council's workers the London Living Wage.
The chance in policy was announced at a council meeting on Monday night after a motion calling on the council to adopt the policy was raised by Tory Coun Graham Witham.
In reply, Liberal Democrat Colin Hall said: "I'm pleased this has been raised. We've been looking at ways to implement this so I'm pleased to say that we support the motion and will implement it from April this year."
The motion was carried unanimously.
Coun Witham said: "Currently welfare is subsidising low pay. This motion tests each member on their priorities when it comes to council spending. It tests each member as an individual on their commitment to the ideals of fairness.
"The thrust of any council should be to do what it sees as right and this council will do what it sees as right even if, at times, it does not seem easy."
Coun Drage, who told councillors the move would cost jobs at a meeting in November, was not at Monday's meeting.
It is believed the cost of bring all council staff up to the London Living Wage will be around £140,000.
Councillors said the measure will be good for the borough as a whole as the increased pay will create a happier workforce and the money will be reinvested in the local economy creating more jobs.