After 11 hours of talks the management of Seoul Metro agreed not to cut staff without consultations with workers, according to a spokesman for the company's 9,300-strong union quoted by Yonhap news agency.

The company operates four out of Seoul's eight subway lines. It carries about 45 percent of the capital's daily subway commuters estimated to total around 10 million.

Workers had threatened a stoppage over the management's plan to cut jobs by 20 percent and let private firms operate some subway stations.

Unionists at state-run Korea Railroad Corporation (KORAIL), which operates inter-city services and some commuter lines linking Seoul with satellite cities, also suspended their stoppage.

"The strike directive is put on hold and union members at demonstration sites will return to work," Hwang Jeong-Woo, an official with the Korean Railway Workers' Union, said in a statement to its 25,170 members.

KORAIL workers are demanding that management re-hire 47 workers fired in 2003 and scrap a major restructuring programme.

The railway plans to lay off up to 4,000 workers, or 10 percent of all employees, by 2012 to reduce mounting deficits. It also wants to privatise management of some facilities such as stations.

The KORAIL stoppage would have been the first walkout in a state-run company under President's Lee Myung-Bak administration, which took power in February.

Lee warned Tuesday that his government would respond sternly to a strike by a state-run company "at this difficult time" for the economy.

Lee has said that strikes, street rallies and security threats from nuclear-armed North Korea have undermined South Korea's "brand value." He stressed the need to restore law and order.

Unions must by law give notice of a strike and undergo a cooling-off period and government mediation before stopping work.