Loyalists called a halt to their 12-week protest on Friday night against children going to the Holy Cross Catholic primary school in north Belfast.
After a meeting of residents, Protestants agreed to suspend the demonstration against the pupils and their parents along the Ardoyne Road.
The protests received cross-community condemnation after children were seen crying while being subjected to abuse. They had to be ushered to school past police officers in riot gear.
The decision to halt the protests followed a direct intervention by David Trimble, First Minister of the Northern Ireland Assembly, and his deputy Mark Durkan.
Several attempts had been made to negotiate some sort of settlement, and much of the violence that has exploded in north Belfast since mid-June has been linked to the dispute.
Mark Coulter, a resident and community worker involved in the protest, said he was relieved it had ended. He added: "It has been suspended to give the measures in place an opportunity to work and to get into dialogue with the nationalist community
"The long-term solution is through dialogue and it has got to happen."
It is understood a number of measures including the installation of closed-circuit TV cameras have been agreed as part of the arrangement to end the stand-off. Talks are also likely between both sides.
Mr Coulter said: "I am pleased the Government has started to listen to the safety concerns because it is something that hasn't been addressed.
"This puts in place the confidence both sides needed to move the situation forward."
Father Aiden Troy, chairman of the school's board of governors, said he too was enormously relieved, but warned there was a lot of work to be done to make sure the dispute had ended for good.
He said: "I believe this is the start of something new and something very good in north Belfast.
"There is a huge job within the two communities to try and reach the same way forward. If we do not get engaged in trying to work out common ground it will only slip back into something awful.
"The signs were always good that something could be achieved and I am enormously relieved we have got this far."Reuse content