A planned strike by teachers will no longer take place on Tuesday.
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Catholic schools throughout the Hastings would have been affected by the industrial action, which was planned because of a dispute with the Independent Education Union.
The two groups are at odds over the negotiation of a new enterprise agreement for teachers and support staff.
The strike would have affected St Agnes Parish schools including Mackillop and St Joseph's Regional colleges, as well as St Peter's Primary School.
On Friday the IEU and the Catholic Commission For Employment Relations reached a significant breakthrough in the process.
IEU general secretary Joohn Quessy said the union had achieved numerous important improvements in the agreement, but further discussions were needed to iron out the details.
He said Catholic school students would benefit from the "positive outcome".
He also paid tribute to the IEU's members, who he said had "stuck to their guns to defend the quality education they provide in Catholic schools throughout this prolonged dispute".
A CCER spokeswoman said the breakthrough was a "welcome step from the IEU and will be appreciated by the whole community".
The commission's executive director Tony Farley said employers welcome the industrial action's cancellation.
"Catholic employers have provided the IEU with a comprehensive terms of settlement which we believe will be supported by staff," he said.
"We look forward to concluding the process so the agreement can be put to a vote and pay increases provided to staff."