The government says ending petrol subsidies will stop the fuel black market

Petrol prices are also being reduced - meeting the union conditions for cancelling their industrial action.

However, the AFP news agency reports that at 0800 local time (0700 GMT), the main market in the commercial capital, Lagos, was still closed.

The government last week ended fuel subsidies overnight, leading to a 15% rise in fuel prices agreed after a similar strike in July.

Although the strike was called off, President Olusegun Obasanjo launched a stinging attack on leaders of the Nigeria Labour Congress (NLC) in a nationwide address on Wednesday night, accusing them of attempting to form a parallel government.

"The leadership of the NLC has engaged in series of subversive activities, deliberately misrepresenting government policies to the public and to its members and using every opportunity to blackmail the government and others who hold contrary opinions or views," he said.

Sensitive

The NLC said they had decided to call off the stoppage after oil marketing companies agreed to revert to the previous oil prices.

The BBC's Anna Borzello in Lagos says that of the four petrol stations she visited early in the morning, two had already reverted to the old price of 34 naira (25 US cents) a litre, while the others were in the process of doing so.

Obasanjo slammed the union leaders

The threat of nationwide industrial action had led to large queues at petrol stations, banks and shops as people tried to stock up with essential supplies on Wednesday.

"The government and the marketers have now agreed to reverse the increases that were imposed unilaterally on 1 October to the old levels," NLC president Adams Oshiomhole told reporters.

Petrol prices are an especially sensitive issue in Nigeria, because there is widespread resentment that oil revenues have done little to help overcome the country's poverty.

Nigeria is the world's seventh biggest oil exporter, and state oil company Nigerian National Petroleum Corporation (NNPC) said it was preparing contingency measures to try and ensure normal output and exports if oil workers joined the strike.

Meanwhile, the Nigerian president's special advisor on the oil industry has resigned.

Rilwanu Lukman's departure - the reasons for which are unclear - comes amid reports that he was unhappy with the government's oil policy.