An agreement has been reached between NZ Bus and First Union after three days of bus driver strikes and seven months of negotiations.

First Union announced tonight that the two organisations had reached an agreement after strikes were called on Thursday for fairer pay and work conditions for bus drivers.

A new two-year contract will be put to bus drivers for ratification early next week, meaning planned strikes next week will no longer proceed.

The terms allow for modest wage increases over the next two years and include improvements to working conditions.

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NZ Bus general manager of operations Claire Neville said she is delighted the parties had agreed on terms that provided certainty to the company's Auckland commuters for the next two years and were fair to NZ Bus drivers.

Council of Trade Unions national president Richard Wagstaff said the deal struck with NZ Bus sets a new benchmark in Auckland on wages and work practices for the industry and clearly signals to other transport operators what terms and conditions are now required.

"NZ Bus is a fair employer and although negotiations were protracted and tough, they have been conducted in good faith, allowing us to reach a good agreement for drivers," he said.

First Union and Auckland Tramways spokesmen Phil Morgan and Gary Froggatt said the new agreement represents important progress for the wider push to improve wages and working conditions across the transport industry.

Both were pleased to be able to minimise disruption to the Auckland public, particularly with school holidays ending next week.

Delegates would be recommending to their members that the offer is ratified, they said.

The original strike was planned for between April 17 and 27 and was largely brought on by a council tendering process (the Public Transport Operating Model, or PTOM) instigated by the previous government.

First Union said bus drivers' pay packets had borne the brunt of a council tendering process that incentivises bus companies to cut wages in order to offer the cheapest tender to council contracts for bus routes.

Companies are struggling to get bus drivers and as a consequence of supply and demand need to pay employees significantly more to attract and retain drivers, it said.

The company was also attempting to cut overtime in new workers' contracts.