Edinburgh bus drivers had voted for an all-out strike

Lothian Buses and the Transport and General Workers Union (T&G) said the offer, which followed a day of talks, would be put to drivers in a ballot.

The union will urge them to accept the two-year deal.

The T&G said it would suspend the current overtime ban immediately and call off an all-out indefinite strike which was planned for next week.

Union officials will be recommending that the offer be accepted.

Almost 1,400 staff have already staged two official stoppages in the capital in the dispute over pay.

An overtime ban has been in place since the first strike took place on 18 July, leading to the introduction of a Saturday service throughout the week.

Some drivers staged a wildcat strike on Wednesday

There was also a wildcat strike on Wednesday after drivers received a letter from employers offering a 5% pay rise over 14 months.

The union said it was a repackaging of a previous deal - 4.2% over 12 months - which drivers had already rejected.

The council-owned company's drivers currently earn almost �8.50 an hour.

The offer which will now be put to drivers would see that rise to �9 an hour by December, and increase to �9.50 an hour within two years.

In the meantime, there will be a 30p an hour increase backdated to March.

This is an offer that meets the trade union's objective of �9 per hour Pilmar Smith Lothian Buses chairman

It may be more than a week before the ballot of drivers takes place.

Passengers will see a gradual return to normal before then, with an augmented Saturday service next week and full services the following week.

In a joint statement, the two sides said the pay rises were on a "no-strings basis" and provided "long-term security of earnings for drivers".

T&G branch chairman Peter Williamson said: "I welcome the fact that we have reached an agreement which will be put to a ballot of the drivers with the union's backing."

Lothian Buses chairman Pilmar Smith said: "This is an offer that meets the trade union's objective of �9 per hour and is phased over a period that makes it affordable without the need for inflationary fare increases."