Some 1,015 workers or contractors for Walsall Council are currently below the living wage of £7.65 compared to the minimum wage of £6.31.
Council leader Mike Bird said last week that an increase was unlikely as it would cost too much.
But in a u-turn he has now asked the town hall's human resources and finance departments to come up with a report outlining proposals to offer the living wage to those employees directly employed by the council - which could total around several hundred people.
He said: "I have instructed our officers to prepare a report for the cabinet to outline the cost which would be £330,000 of which 50 per cent can be picked up by the schools.
"I think it is the right thing to do. We have been looking at this issue for about 12 months, but the costs were prohibitive. We believe we can look at accommodating our directly employed staff, but it will be up to contractors who provide services to us to address the issue themselves."
There had been concerns that the total increase in wages including those contracted in areas such as social care would see the annual wage bill rocket by at least £2 million if all staff and contractors received the wage.
Figures obtained from the council's financial department revealed the majority of workers at the local authority earn a rate of pay at or above the living wage.
However, there are 1,015 posts which are graded below it, including 640 in schools.
The move comes after calls were made by opposition Labour councillors for the authority to increase their pay to the living wage level which is calculated according to the basic cost of living.
Councillor Mohammad Nazir said: "If Mike Bird has done a U-turn on this since last Friday well that is good. But I would like to make it clear that this is our policy and we have always been fully committed to implementing the living wage regardless of the Conservatives blowing hot and cold over it.
"We can't go on accepting that people in Walsall are worth less than the rest of the country and we can't ask employers to pay more if, as the council, we leave our own staff to struggle on low pay," Councillor Nazir added.
Unions launched a major campaign last year for a minimum increase of £1 an hour to increase the bottom rate of pay in local government to raise it to a living wage hourly rate.