More than 100,000 Scots to receive living wage

But campaigners accused the Chancellor of "spin" and a cynical move to undercut the current living wage, set at £7.85.

There were fears last night that some staff could even see their pay cut because of the policy.

The Treasury said it was up to living wage employers to decide whether to stick with £7.85 or pay £7.20 an hour instead.

SNP Treasury spokesman Stewart Hosie accused George Osborne of proposing that the living wage in Scotland was "effectively lowered".

Labour's Chris Leslie said that the "real living wage" would actually have to rise far above £7.85 - to compensate for Mr Osborne's cuts to tax credits also announced in the Budget.

Union leaders warned that the move would deliberately undermine efforts to create a rate that lifts people out of in-work poverty.

The The Scottish Trades Union Congress (STUC) said that the £7.85 figure had been calculated independently and was designed to provide workers with enough money for adequate accommodation and food as well as to avoid the health and psychological problems often associated with poverty.

The STUC accused Mr Osborne of hijacking the living wage message and exposing workers to "poverty pay".

General Secretary Grahame Smith denounced the move as "simply a cheap gimmick aimed at undermining the successful work we have undertaken to promote a meaningful living wage that genuinely helps people out of in-work poverty."

Around 140,000 low wage workers in Scotland are expected to directly benefit from the change.

However, ministers also believe that there will be a knock-on effect up the wage scale that could help hundreds of thousands more.

Outlining the policy the Chancellor George Osborne also set an ambition for a £9 living wage by 2020.

The move outflanks Labour, which campaigned in the run up to May's General Election, for the minimum wage to rise to £8 an hour by the end of this decade.

The independent Office for Budget Responsibility (OBR) forecasts a full-time minimum wage worker will earn more than £4,700 more in today's prices by 2020 because of the living wage.

But the sting in the tail could be job losses.

Official forecasts published alongside the Budget also suggested that the living wage could cost 60,000 jobs UK-wide.

Mr Osborne coupled the policy with welfare cuts, saying he wanted to move the UK from a high benefits to a high wages economy..

But experts warned the move would do little to achieve that aim.

Professor Jason Heyes, from Sheffield University, said: "A living wage of £7.20 an hour will do little to achieve the Chancellor's stated objective of making the UK a 'high wage' economy.

"Furthermore, it is possible that it will undermine campaigning efforts in relation to the current living wage, given that the government's lower rate might come to be seen as the new benchmark for employers."

Mr Leslie said that overall the Chancellor had created a new "work penalty" even with the living age.

He added: "The real living wage needs to be a lot higher because of the changes to tax credits."

Labour analysis indicated that a lone parent with two children working 16 hours a week on the minimum wage would gain just over £400 from the living wage but would lose £860 from tax credits changes next year.

Sam Bowman, deputy director of the free market Adam Smith Institute think tank, said: "The new national living wage is a disaster that will condemn tens of thousands of people to long-term unemployment.

Under-25s will continue to receive the minimum wage, the Treasury said.

The decision not to pay young people the living wage was made because of fears over high youth unemployment, sources said.