Amicus, Britain's largest private sector union, late on Thursday suspended industrial action that was planned to start on Friday 7th March at Peugeot's Coventry 206 plant, following last minute talks.

The strike that was scheduled to last for up to four days covering Peugeot's four shifts working over this weekend has now been suspended.

Amicus called off the strike in response to improvements from the company in bonus payments and proposals that would make employees increase pension scheme contributions.

Amicus national secretary automotive Duncan Simpson, said: "At last common sense has prevailed. Now our members will be given the opportunity of deciding if the company's offer is acceptable. If they reject the company's offer then and only then will industrial action be continued."

Earlier, the BBC reported that thousands of workers at the factory would go on strike this weekend after talks to avert the action ended without agreement.

The action would have followed a stoppage last month, which cost Peugeot millions of pounds in lost production.

About 3,500 workers are involved in the dispute, the report said.

The BBC said Peugeot recently announced an increase in profits of 9% in 2002 which unions say is fuelling the anger felt by members over the company's offer.