Tory leadership hopeful Liz Truss urged officials to "speak softly but carry a big stick" on public sector pay during her time as a Treasury minister.
The former Chief Secretary said she wanted to make pay deals for nurses, teachers, soldiers and the police "so complicated that no-one knows what the overall figure is".
A leaked recording of a private meeting with Treasury officials, obtained by the Mirror, prompted claims she had adopted a "cynical and deliberate strategy" of holding down public sector pay.
Union chiefs criticised Ms Truss's "smoke and mirrors" approach while hard-working public servants endured a brutal decade of pay cuts and freezes.
At the time of the recording in 2017, Theresa May's Government had just announced the 1% cap on public sector pay rises, which had been in place since 2010, had been lifted.
But Ms Truss told aides that the Treasury would still "control" pay increases - although she warned them against being "too explicit" about it happening through the Budget.
The would-be Prime Minister has claimed in recent days that higher rises in the latest pay round would lead to a “wage-price spiral” that made inflation worse.
But in the recording, she said: "My view is that you go for softer sounding policies that are tough, rather than tough sounding policies that aren't.
"The whole idea of the change in the way we're looking at the pay cap is that we're actually going to control spending through departments budgets pretty tightly."
She went on: "We're not going to say you've got this headline number you've got to cap. That's what we need to do on everything. We need to speak softly but carry a big stick."
The now Foreign Secretary added: "We're controlling it, but we don't want to be too explicit that we're going to control it through the Budget.... We'll look at it on a case by case basis.
"What we want to do is make public sector pay so complicated that no-one knows what the overall figure is."
TUC deputy general secretary Paul Nowak warned that ongoing pay freezes and cuts had pushed public sector staff to the brink.
“These reports highlight a cynical and deliberate strategy to hold down the pay of public servants - no matter the cost to those workers and the communities they serve," he said.
“Nurses, teachers and other public service workers have endured a brutal decade of pay cuts and pay freezes.
"This has pushed many into hardship and resulted in dedicated staff quitting the jobs they love.
“Our amazing public sector workforce risked life and limb to get us through the pandemic. They deserve a decent pay rise - not smoke and mirrors from ministers.”
A spokesperson for Ms Truss said: “Liz wants the best possible deal for hard-working public sector workers.
"However, she believes we must exercise restraint to make sure we don’t stoke inflationary pressures that would make current economic challenges worse and increase the financial burden on struggling households.”
