Firefighters have called off proposed strike action after an agreement was reached between unions and employers.
The battle over pay and conditions has acrimonious
Employers and the Fire Brigades Union (FBU) were deadlocked over the issue of working during public holidays.
The employers had claimed a deal came unstuck when the union refused to accept public holidays should be normal working days.
But the agreement means the final two stages of a wage deal will be paid and a ballot for strikes suspended.
At Thursday's National Joint Council (NJC) meeting, employers and the FBU agreed a form of words, brokered by the TUC, to agree the terms of working on a bank holiday.
Firefighters will carry out normal duties on bank holidays on the understanding previous arrangements for double time and a day off in lieu for those rostered to work will apply.
The agreement means a ballot on strike action of 52,000 FBU members will be suspended.
BBC labour affairs correspondent Stephen Cape says the big test will be implementing the deal at local level.
"Firefighters who have worked with the same terms and conditions for decades will now be asked to change radically," he said.
The two sides agreed on a 3.5% pay rise backdated to last November and a further 4.2% pay rise from July.
London Fire and Emergency Planning Authority (LFEPA) chairwoman Val Shawcross welcomed the new agreement.
She told BBC News 24: "The employers have managed to achieve a completely re-negotiated set of terms and conditions.
"We really feel we have the basis for modernising the fire service".
Public holidays were the final bone of contention, she said.
"For 25 years there was no real negotiation, change or bargaining in the fire service because of the pay formula.
"We have had a lot of catching up to do," she said.
Mike Fordham, assistant general secretary of the FBU, said he hoped the dispute could now be put behind them.
"This has been a long and difficult dispute but in the end our union came through it strong and united".
Deputy Prime Minister John Prescott said: "We must now put this dispute behind us and move forward with our common goal of providing a modern fire and rescue service fit to meet the challenges of the 21st Century."
The Local Government Association also welcomed the agreement.
"Significant pay increases for staff have been delivered in exchange for service improvement that will deliver a more appropriate, better-resourced and inclusive service focused on preventing loss of life," it said in a statement.
The two-year-long dispute centred on pay and the status of public holidays.
The issue of whether the fire service has modernised sufficiently was also a moot point with "modernisation" including new shift patterns, the introduction of overtime and the closure of some fire stations at night.
Clashes between employers and unions led to strike action last year.
The latest industrial action had been due to take place sometime between 7 September and 5 October.