Queen Mary, University of London, has become the first university in the capital to pay its cleaners a "living wage".
From this week, contract cleaners at Queen Mary will be thousands of pounds better off under the agreement, which will take their pay from the minimum wage of £5.05 an hour to £6.70 by the end of 2007.
The college council voted last week in favour of the agreement.
From last July, community group London Citizens, students, trade unions and staff lobbied college management to conclude the agreement. They held a rally in The living wage is set by the Greater London Authority's Living Wage Unit.
Queen Mary's 150 cleaners are employed by two firms, KGB and Key Trade, which paid them only the legal minimum in sick pay and gave them 12 days holiday a year.
London Citizens will write to Sir Howard Davies, the director of the London School of Economics, to press the institution to adopt the living wage. It has successfully lobbied hospitals in East London and businesses based at Canary Wharf such as HSBC, PriceWaterhouseCoopers and KPMG to adopt the living wage.
Matthew Bolton, London Citizens' living wage organiser, said the higher education sector was one of the worst in terms of pay and conditions for cleaners.
He said: "We also work with big banks and hospitals who use big multinationals, which are not great employers but have better standards than the small ones (used by some universities)."
He said he hoped every university in the capital would adopt the living wage.
"I think there will come a tipping point in higher education in London. We are not near it yet, but if we get the big ones, then it will become the status quo," he said.
Ed Blissett from the GMB union, which represents many university cleaning staff, said he was delighted with the agreement. He said: "Universities have dragged their feet on improving pay for those on very low pay such as cleaning staff.
"They have tended to contract out and to see this as an excuse to disassociate themselves from issues relating to cleaners' pay. So I am very pleased to hear about Queen Mary's agreement. As far as I'm aware, it's the first London university to achieve this."
Mr Blissett said that the union was also making good progress in negotiations for a living wage at East London and Brunel universities, as well as at Royal Holloway, University of London.
A spokeswoman for Queen Mary said: "At a meeting on April 5, the council of Queen Mary, University of London, committed the college to the principle of socially responsible contracting.
"The college will now seek to implement this policy as soon as is feasible, given our current commercial commitments. We will be working through the details of this over the next few months."
A report for Ken Livingstone, the Mayor of London, found that one in seven employees in the capital has an income that leaves them below poverty levels.
The report A Fairer London - The Living Wage in London calculates that a "living wage" in London would be £6.70 an hour.