The national postal strike has been put on hold after both sides in the dispute agreed to a “period of calm” before Christmas.

The Royal Mail and the Communication Workers Union said that they would continue talks on the company’s modernisation plans without the spectre of industrial action. Two planned 24-hour walkouts for today and Monday, each involving up to 121,000 workers, have been called off.

Details of the agreement reached between the two sides are due to be published today, although sources said it was substantially the same deal that was on the table last month. The union has also “put on hold” its planned High Court action against Royal Mail’s recruitment of 30,000 temporary workers.

Dave Ward, the CWU’s deputy general secretary, said that the union — which retains a strike mandate — was under no illusions about the hard work ahead to rebuild trust between workers and management after a “bitter” dispute. He said of the agreement: “Our members will now know we can deal with modernisation in a way that gives them improved job security and improved terms and conditions.”

He also issued a plea for the Government to tackle the Royal Mail’s £10 billion pension deficit, saying that until it was dealt with it would be difficult to overcome the “challenges” ahead.

Many postal workers reacted angrily to the deal and warned union leaders that they were sacrificing their strongest card, the threat of Christmas strike action, without firm agreements on how many jobs would be lost and working conditions. But some staff were feeling the financial pinch from taking industrial action. Royal Mail had said that workers who took part in the two planned 24-hour strikes would lose two days’ pay. Two waves of national strikes have already been held and there has also been a series of local strikes during the Past few months, including nearly 20 in London alone.

Mark Higson, Royal Mail’s managing director, said he was “delighted for our customers that we have got back to a sensible agreement that will allow us to deliver a great Christmas”.

He said that the £10 billion pension deficit did not form part of the deal and criticised the CWU for having opposed Lord Mandelson’s Postal Services Bill, dropped in the summer owing to backbench opposition, which would have privatised part of the company and meant the Government assuming responsibility for the deficit.

A spokesperson for the Department for Business said that the deficit could only be addressed in the “context of urgently needed transformation of the business”, which had been hampered by “strikes aimed at derailing change”.

Lord Mandelson, the Business Secretary, said last night: “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, let us hope that these wrinkles will be smoothed out by discussion and negotiation without resorting to further strikes.”

One source close to the talks suggested that a weakening of the union’s position had led it to sign the agreement. The source cited Royal Mail’s claim that a large number of CWU members did not take part in last Saturday’s strike action and that the backlog caused by the national strikes had been reduced to three million items.

The source also cited the union’s failure to launch its court case against the company, which has been pending since last month, over its temporary worker recruitment.

Representatives of the Royal Mail and CWU are now due to meet in a series of meetings chaired by an independent arbiter appointed with the help of the conciliation service Acas and the TUC. Brendan Barber, the TUC General Secretary, who has chaired peace talks between the two parties over the past two weeks, said that the dispute had been characterised by a “lack of trust”.

He added: “Trust has got to be rebuilt. They have to work together to manage change in a way that really carries the workforce.”

Robert Hammond of Consumer Focus, a consumer lobby group, said: “Those anxious about sending Christmas presents will sleep easier tonight. This is a victory for common sense.”

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