Liberal Democrat Business Secretary Vince Cable has defended the newly announced rise in the minimum wage, after critics claimed it did not go far enough.

Mr Cable hit out at opponents and challenged them to explain how to fund a further increase.

But he did say that he wanted to see the low paid earn more as the economy turns around.

The Tory-Lib Dem Coalition has said that the national minimum wage will to increase by 20p an hour to £6.70, the biggest real-terms rise in seven years.

For apprentices the rate will increase by 57p from £2.73 per hour to £3.30.

But TUC general secretary Frances O'Grady said there should have been a "much bolder increase" in the main rate.

"With one in five workers getting less than a living wage, this is nowhere near enough to end in-work poverty. Britain's minimum-wage workers should be very fearful of the billions of pounds of cuts to government help for the low-paid that the Chancellor is planning if re-elected," she added.

Shadow business secretary Chuka Umunna said: "This 20p rise falls far short of the £7 minimum wage which George Osborne promised over a year ago."

Mr Cable hit out at the criticism.

He said: "People who say it is nowhere near enough need to explain how else we do it."

He accused some of wanting to set the rate "on a political basis ...that is not sensible"

But he added: "As far as people on low pay are concerned of course I want to see wages go up as the economy improves".

Mr Cable himself called earlier this year for the minimum wage for entry-level apprentices to rise to a much higher rate, £3.79 an hour.

No 10 suggested that the changes had been agreed by both the Liberal Democrat and Tory ends of the coalition.

The Prime Minister's official spokesman said that the move was "collectively decided" within government.

Mr Cameron said the rise was "a good deal, it is right for our country and we can only do it because we have got a strong economy.

"I have been talking to apprentices who after two or three years as an apprentice could be earning £25-£26,000 a year. That's right. That's what I want for our country - a country where if you work hard and do the right thing you get rewarded."

But CBI director-general John Cridland said the rise was too high and "disappointing", accusing ministers of overruling the independent Low Pay Commission, which had recommenced a lower rate.

Labour has pledged an £8 minimum wage in the next parliament if it wins May's General Election.

But critics claims the rate is due to rise above that level over the next five years.

Mr Cable is also planning to launch a national minimum wage accelerator - an online tool which will make it easier to compare rates of pay across regions, sectors and occupations.

The tool is designed to allow workers to compare wages with others in their sector and region.