Fears of a national strike in Nigeria have waned after union leaders claimed they had reached agreement over a 12.5% pay increase.

The Nigeria Labour Congress, which had been holding out for a 25% rise for members' salaries, said it had accepted the compromise because of the country's worsening economic situation.

Nigeria two weeks ago said it could no longer afford to service its $33bn foreign debts because of plunging oil revenues and the failure of some of its privatisation plans.

But while the NLC, which represents both public and private sector workers and has 29 affiliates, was adamant that the government had made the offer, the office of Nigerian President Olusegun Obasanjo said it was unaware of the increase.

A settlement would, however, prove a boost to Mr Obasanjo, who has been fighting to save his political career since lawmakers last month asked him to resign or face impeachment for misrule.

Nigeria's anti-corruption drive was boosted on Thursday when the government revealed it would open a probe into the sale of a 49% stake in the country's state airline to UK-based Airwing Aerospace.

Pledges broken

Mr Obasanjo in July set up a committee to discuss the NLC's wage raise call, following a threat to call a national strike if negotiations were not forthcoming.

Union chiefs have accused the government of reneging on a deal to raise wages by one quarter in May last year.

While the increase was rescheduled for May this year, the government again failed to implement it, saying it had been left unable to pay because of a decline in oil revenues.

Mr Obasanjo in May 2000 doubled Nigeria's minimum wage to 5,500 naira.