The Cabinet has signed off on new legislation under which MPs will be given a 1.5 percent pay increase backdated to July last year.
A Remuneration Authority determination last month gave MPs a 3.5 percent payrise.
Prime Minister John Key said the new rate was aligned to public sector pay rises.
"The average annual percentage change smoothes out some of the volatility that can appear in the straight annual movements of the QES (Quarterly Employment Survey).
"This measure will meet my objective in ensuring that MPs remuneration changes are in line with the wider public service."
Mr Key said legislation bringing this change into effect would be introduced to Parliament later this week, and passed under urgency.
