British postal workers called off a fresh round of strikes Thursday after union leaders and the state-owned Royal Mail reached an interim deal in their dispute over pay and modernisation.

Mediators said the Communication Workers' Union (CWU) and Royal Mail had agreed to a "period of calm, free of industrial action" in the busy run-up to Christmas, when both sides would try to reach a long-term agreement.

Strikes had been planned for Friday and Monday involving all 121,000 CWU members in the Royal Mail, in what would have been the third round of industrial action in as many weeks in a long-running and bitter dispute.

The previous strikes had caused disruption at a crucial time for Royal Mail, as it faces increased private sector competition and a cultural change away from sending letters and cards.

- The agreement reached today is, I think, a very important step forward - said Brendan Barber, general secretary of the TUC umbrella union organisation which mediated this week's talks.

- 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 in Royal Mail and the CWU to hammer out the final agreement on the way forward in a company that is facing a period of dramatic change.-

Business Secretary Peter Mandelson welcomed the news, saying the industrial action had "done nothing to help Royal Mail".

- I hope very much indeed we will not see further strikes. I hope very much indeed, if there are issues that need to be solved, that these wrinkles will be smoothed out by discussion and negotiation - he said.