A fresh wave of postal strikes was dramatically called off tonight just hours before the latest walkouts were due to start.
Sources told the Press Association that 24-hour national stoppages due to be held tomorrow and next Monday would not go ahead after a deal was agreed to end a long-running row over jobs, pay and pensions.
Members of the Communication Workers' Union have held a series of strikes in recent months which have caused huge delays to mail deliveries.
But following several days of talks between the union leaders and the Royal Mail, an agreement was finally reached.
The union's postal executive is believed to have sanctioned the agreement at a meeting in London today.
The union made no official comment but a statement is expected later.
Business Secretary Lord Mandelson welcomed the news that the strikes had been put on hold, saying he hoped that all the "wrinkles" in the modernisation process could be solved by negotiation.
"These strikes have done nothing to help Royal Mail," he told a press conference in London.
TUC general secretary Brendan Barber said the agreement provided for a "period of calm" in the run-up to and beyond Christmas, free of industrial action, to enable further negotiations to be held to secure a longer term deal.
Mr Barber said the agreement also resolved a number of local disputes which have flared in recent months and addressed areas of concern for the union and workers.
"The delivery of the terms of this agreement means that Royal Mail services will be free of any disruption up to and through the Christmas period."
Mr Barber said the agreement would lead to an independent person being appointed to oversee the "detailed negotiations" which will now take place.
He went on: "The agreement is a very important step forward, but it is a long way from the end of the road.
"Over the next period, an immense amount of hard work is going to be needed to hammer out the final agreement on the way forward in a company that is facing a period of dramatic change."
Mr Barber said there was a lack of trust between the two sides, which had been one of the "major obstacles" to a deal being reached.
"Change is certainly coming. What both the management and the union have committed to is working together to manage that change in a way that carries the confidence of the workforce, to ensure that this vital public service meets the needs of all those millions of people and businesses for whom the post is a vital lifeline."
Dave Ward, the union's deputy general secretary, said he was pleased with the agreement, which had been accepted unanimously by the postal executive of the CWU.
"We can now have a period of calm where we hope we can genuinely take forward modernisation in a way that puts the union at the centre.
"Our members will now know we can deal with modernisation in a way that gives them improved job security and improved terms and conditions."
Mr Ward said the union was under no illusions about the hard work ahead and he said the dispute had been "bitter".
He went on: "It will take exceptional efforts to rebuild trust. But we will work very hard to ensure that the agreement stays on track."
Mr Ward said the two sides will have the support of the conciliation service Acas during the negotiations over the next few months.
He issued a fresh plea to the Government to tackle the Royal Mail's £10 billion pension fund deficit, saying that until that was dealt with it will be difficult to overcome the "challenges" ahead.
Robert Hammond, of Consumer Focus, said: "Those anxious about sending Christmas presents will sleep a little easier tonight.
"This is a victory for common sense.
"The onus is now on all parties to hammer out a long-term solution in the coming months."
The union said details of the agreement would be released tomorrow.
Lord Mandelson said: "I welcome the news that the strikes have been called off. It's important that both sides now keep talking about the next phase of modernisation which is vital for the company's future.
"I would like to thank Brendan Barber for the role he has played in brokering a way forward.
"I think disputes and strikes of this kind, they are best avoided and best solved quickly.
"Strikes do nothing to help Royal Mail, its business, its future prospects and of course the jobs and livelihoods of those who work in Royal Mail.
"I hope very much indeed that we will not see further strikes, and I hope very much indeed that if there are any issues that have got to be resolved, if there are wrinkles in the modernisation process which is absolutely vital for Royal Mail, that these wrinkles will be smoothed out by discussion and negotiation without resorting to further strikes in the future."
David Frost, director-general of the British Chambers of Commerce, said: "This is very welcome news and we are glad some common sense has prevailed in the run-up to Christmas."
The union has decided not to press ahead with legal action against Royal Mail over the recruitment of agency workers following tonight's agreement, it was learned later.
A union official said a peace process was now under way, although the legal action was "on hold".
Formal proceedings have been issued and it was thought that the case would be heard in the High Court tomorrow.
Industry sources suggested that the Royal Mail had not recruited anywhere near the 30,000 temporary staff it said it was taking on to deal with the backlog of post as well as the Christmas rush.
It was suggested that the company had not even recruited the 15,000 it normally takes on at this time of year.
Royal Mail managing director Mark Higson said he was "delighted" for customers that a "sensible agreement" had been reached which would allow deliveries to return to normal in the run-up to Christmas.
He said the agreement allowed the company to move forward with modernisation in the new year.
"We look forward to positive and constructive discussions on the next stage of Royal Mail's modernisation plan, which is key to the future of the company, all those who rely on it and to the future of the universal service.
"I am extremely grateful to Brendan Barber for the tremendous help and support he has given over the last few weeks. I would also like to thank all those who have worked so hard to minimise disruption and to keep the mail moving for our customers."
Mr Higson stressed that the Royal Mail's pension scheme did not form any part of today's agreement.
"Earlier this year, the Government put forward a package of solutions which provided a resolution to the pension issue and would have helped secure our people's benefits - however the CWU chose to campaign against that package and the Government has since made it clear that it is now no longer available."
Shadow business secretary Ken Clarke said: "I welcome this period of calm and hope the time will be used to get on with the purposeful modernisation of this important service.
"Industrial action is of no use to anybody including the postal workers."Reuse content