The Ontario government will increase the minimum wage to $10.25 an hour by 2010, the Toronto Star reported Wednesday.

The newspaper reported that the increase will be unveiled in the provincial budget on Thursday, after weeks of pressure on the government from the New Democrats and poverty activists.

They had been lobbying for an immediate hike to $10 an hour from the present $8 an hour.

Instead, the wage will be bumped up over the next three years, sources told the Star.

In 2008, it will climb to $8.75; in 2009 it will jump to $9.25; and in 2010 it will rise to $10.25 an hour.

Premier Dalton McGuinty and Finance Minister Greg Sorbara refused to comment on Wednesday.

Deputy Premier George Smitherman also declined comment on budget details, but said the Liberals' track record shows four minimum wage increases in less than four years.

He said more increases "should come as absolutely no surprise."

The gradual increase is expected to be supported by a study that Finance Minister Greg Sorbara will release Thursday.

The study, which was commissioned by Sorbara, warns there would be widespread job loss if the government were to immediately hike the wage to $10 an hour.

University of Toronto professor Morley Gunderson found that an increase of $2 in one fell swoop could mean a 7.5 per cent to 15 per cent decrease in jobs, which could translate to the loss of between 90,000 and 180,000 jobs.

Gunderson's report was written in six weeks at a cost to the government of $24,000.

The $10 minimum wage campaign was spearheaded by NDP MPP Cheri DiNovo. She said the increases should come sooner.

"I wish that we had $10 an hour now," DiNovo said. "Not phased in over three years so that the working poor and working poor for three years."

DiNovo added that the cost to produce Gunderson's report was more than a person earning minimum wage will make in 18 months.

The Conservative opposition slammed the wage increase plan, saying it was hastily put together for political purposes.

"I think it's something they just put together on the back of a napkin to try to up the ante against the NDP's $10 an hour minimum wage," Conservative MPP Tim Hudak said.

"We have lost 120,000 well-paying manufacturing jobs in Dalton McGuinty's Ontario. The fact that so much debate about minimum wage is occurring is because we're losing well-paying jobs and changing the economy to McDonald's burger-flipping jobs."

Ontario's business community is also upset by the plan, saying they will be hurt and added costs will be passed on to consumers.

There are an estimated 200,000 Ontario workers earning minimum wage, while 1.2 million make less than $10 an hour.

The minimum wage was $6.85 an hour in 2003 when the Liberals formed the government.

It has since been gradually increased to $8.

With a report from CTV's Paul Bliss and files from The Canadian Press