In a bid to placate MPs demanding higher pay packages, Government today agreed to further hike their monthly allowances by Rs 10,000.

The Union Cabinet, which met under the chairmanship of Prime Minister Manmohan Singh, decided to increase the office and constituency allowances of MPs by Rs 5000 each per month.

The decision come against the backdrop of a section of lawmakers expressing unhappiness over the increase proposed by the Cabinet last week.

The Cabinet had not accepted the proposal of the Joint Parliamentary Committee to hike their salaries from Rs 16,000 to Rs 80,000 and instead pegged it at Rs 50,000 per month.

Besides, it had hiked the office and constituency allowances from Rs 20,000 per month each to Rs 40,000 per month each.

Now, the constituency and office allowance of MPs would be Rs 45,000 each per month, sources in the Government said.

The Lok Sabha had witnessed uproar last week by RJD, SP and JD-U members over government's decision with agitated members of these parties dubbing it as an insult to Parliament.

BJP, RJD, SP and JD-U leaders had a meeting with Finance Minister Pranab Mukherjee on Saturday over the issue after which the government had assured them to take appropriate steps.