Oranga Tamariki social workers have reached agreement on a pay equity settlement worth $114.6 million over five years.
Minister for Children Tracey Martin said cabinet had agreed to fund the settlement reached in principle between Oranga Tamariki and the PSA.
The settlement applies to more than 1300 Oranga Tamariki social workers and would see an average lift in their salaries of 30.6 percent over a two year period, she said.
The PSA said it was an historic milestone.
Cabinet's agreement to fund the settlement was a recognition that the role of statutory social workers had been subject to historical and ongoing gender-based undervaluation, national secretary Erin Polaczuk said.
"We have no doubt that this settlement will have an influence for social workers in other sectors and in that sense it is a true trailblazer for the undervalued profession of social work," she said.
Ms Martin called the deal another demonstration of the government's commitment to pay equity for all women.
"This decision recognises a historic gender-based undervaluation of Oranga Tamariki social workers, who perform vital work in keeping children and families safe."
PSA members will now vote on whether to accept the settlement and the result should be known by the end of next month.
Last week the government announced it would be introducing legislation making it easier to put in pay equity claims and setting up a framework to address pay discrimination in female-dominated jobs.
Tina Corrigan, one of three social workers who lodged the pay equity claim in 2015, said once the agreement was ratified, social workers would be recognised by their country, government, and management as professionals.
Ms Corrigan has been a social worker for Oranga Tamariki and its predecessor agencies for 15 years.
"It's not just a spectator sport, it's hard work," she said of the job.
"It takes a piece of you, it takes a little bit of your energy, it takes a little piece of your soul.
"It affects family relationships with your own children."
Social Service Providers Aotearoa, which represents social workers in community organisations who work for Oranga Tamariki, said they should also get fairer pay.
Oranga Tamariki chief executive Grainne Moss said the ministry had been working to see what the impact could be for non-government agencies.
"The PSA and ourselves have already had discussions about how we can take a system-wide lens, and how do we ensure we learn from this process for the benefit of social workers and NGOs, so we'll be working collaboratively with the sector."