University lecturers' leaders have accepted a new pay offer and have suspended a boycott of exam marking.
The marking boycott had threatened to disrupt graduations
The University and College Union (UCU) agreed to a rise of 10.37% over 22 months, plus at least 2.5% in the next year, in negotiations with employers.
The union had been seeking a pay rise of more than 20% over three years.
Last week it turned down a 13.1% offer. The deal involves a review of the money available for pay, which the union says might mean a bigger rise in 2008.
There is a bigger overall percentage rise - 15.5% - for the lowest-paid cleaners, porters, security staff and other non-academic university workers.
The UCU said it had insisted that the deal had to include the repayment of wages deducted from staff taking part in the marking boycott.
The industrial action was suspended from midnight on Tuesday. Union members will be balloted on the deal - amid some signs of discontent about what has been achieved.
The boycott of exam and coursework-marking began in March.
It had led universities across the UK to warn that graduations may not go ahead as planned, threatening to undermine students' chances of finding jobs.
The agreement involves:
August 2006 - greater of 3% or £515
February 2007 - 1%
August 2007 - 3%
May 2008 - greater of 3% or £420
October 2008 - greater of 2.5% or RPI (at September 2008).
UCU joint general secretaries, Sally Hunt and Paul Mackney, said: "No settlement ever provides everything that you want for members, but we believe that this is the best that can be achieved within the current national negotiating environment."
Arguing for more
Their statement continued: "Members will see significant increases in their salaries over the next two years, but we are acutely aware that this will still not make up the ground lost over the past decades."
Chris Kaufman, national officer of one of the support staff unions, the Transport and General Workers' Union, hailed the deal as "a first move to deal with low pay in universities".
The chair of the Universities and Colleges Employers' Association (UCEA), Dr Geoffrey Copland, said they were delighted.
"We are particularly pleased that the immediate suspension of industrial action will stop disruption for students and allow completion of examination processes."
UCEA's chief executive, Jocelyn Prudence, said: "We hope this will be viewed as a good offer on top of the increases of 3% - 5% already in the pipeline from this August as well as other increases in pay and pension costs."
The National Union of Students president Kat Fletcher said: "This has been an extremely difficult time for students, who have experienced serious disruption as a result of the dispute.
"However, today's decision to put the revised offer to the membership finally breaks the deadlock that has been so frustrating for students."
The chief-executive of the vice-chancellors' organisation Universities UK, Diana Warwick, said anxious students and their parents would be relieved to know the end was in sight.
"The priority is now to ensure that any affected examination and graduation timetables are quickly amended."
Higher Education Minister Bill Rammell said: "The immediate suspension of industrial action is great news and will allow students' assessments to proceed as normal."
But many of those taking action had been refusing to set exams as well as to mark students' work.
The Tory higher education spokesman, Boris Johnson, said: "It is vital that the lecturers now commit to going ahead with all the exams that have been postponed or cancelled to ensure the future career prospects of students, particularly those graduating this year, are not placed in jeopardy."
Liberal Democrat spokesman Stephen Williams said: "Any future disputes must be handled differently so the threat of unmarked final exams never arises again.
"Young people's futures can't be put on hold because of union and employer intransigence."