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The strikes have been postponed until the New Year for "a period of calm" during which the two sides can continue to negotiate, the TUC general secretary Brendan Barber said last night.

Barber said Royal Mail deliveries would be "free of any disruption" over Christmas but that a final agreement remained far off.

Virgin Media, a top 10 user of direct mail, described the postponement as "good news".

Insurance company More Than, the 12th biggest spender on direct mail in the past year according to Nielsen Media Research, described the deferral as "an early Christmas present".

More Than continued to use Royal Mail during the strike, and coped by rescheduling mailings to avoid strike days.

"It would have been difficult to switch supplier as we mail in large volumes to consumers and ultimately we have to rely on Royal Mail to do that," said Pete Markey, marketing director at More Than.

Markey said that sales had not been affected by the strike but that there had been a "hidden cost" in planning and moving campaigns to different dates.

"When I heard the news last night that the strike had been called off it felt like an early Christmas present," Markey said. "We do a lot of mailing activity in December for January sales and if the strikes had continued it would have been a big headache."

The decision to end strike action was also welcomed by the Direct Marketing Association, which had lobbied senior politicians, including business secretary Peter Mandelson, to intervene in the strike.

"It looks like common sense has prevailed," said Robert Keitch, the DMA's chief spokesperson. "I believe the message that direct mail is something that is inextricably linked to the future success of Royal Mail has got through."

The union had called for a national strike tomorrow (Friday) and Monday 9 November as part of an increasingly bitter dispute over pay and the modernisation of Royal Mail operations and working practices.

The backlog of mail caused by last week's postal strikes was yesterday still standing at around five million items. Keitch said he had heard "depressing stories" of several DMA client members cancelling campaigns because of uncertainty over future strikes.

The war of words between Royal Mail and the CWU had become increasingly antagonistic with this week asking postal workers to defy their union and come to work today, had the strike gone ahead.

Lawyers for the CWU were preparing for a hearing in the High Court tomorrow in which they would challenge Royal Mail's hiring of 30,000 temporary workers as an illegal move.