H&M has pledged to pay a living wage to 850,000 textile workers after expressing frustration over a lack of action by governments to address working conditions in Asian factories in the wake of the Rana Plaza disaster.

The world's second-biggest clothing retailer said it would support factory owners at two factories in Bangladesh and one in Cambodia to adopt a fair living wage next year. The Swedish company, which has more than 200 stores in the UK, will then expand the programme to cover the 750 factories that supply its clothes by 2018.

H&M said: "We believe that the wage development in production countries, which is often driven by governments, is taking too long. H&M wants to take further action and encourage the whole industry to follow."

Working conditions for textile workers in developing countries have risen up the international agenda following the Rana Plaza disaster this year when 1,129 were killed by the collapse of a garment factory in Dhaka in Bangladesh. H&M did not have clothes made at the site and was the first company to sign a safety agreement for Bangladeshi factories after the disaster.

H&M said that because conditions varied between countries and factories, it would support textile workers in negotiating a living wage – a salary that enables a decent standard of living – instead of imposing a figure. It said paying more to factories that adopt a living wage would not push up the price of its goods.

The company said it would use the Fair Wage Method, an established process for achieving a living wage. After identifying workers' basic needs, a wage is agreed and is then reviewed regularly with better dialogue between workers and employers.

H&M said: "We are willing to pay more so that the supplier can pay higher wages. It is a collaboration between H&M and our suppliers."

H&M has most of its clothes made in Asian factories, including Bangladesh, whose textile industry is vital to the country's economy. National governments have often been reluctant to stand up to global companies on behalf of their workers.

Anna McMullen, campaigns co-ordinator at the Labour Behind the Label campaign group, said H&M's announcement was encouraging because it meant the company would have to increase workers' pay. But she called on H&M to be more specific about its aims.

"It's great for companies to make statements like this but it remains to be seen what it's really going to achieve unless they make a commitment to what a living wage really is."

She called for H&M to put a figure on a living wage, to ring-fence the costs for payment to factory owners and to follow up on to its pledge to support negotiations between workers and managers.