Melbourne's tram drivers will press ahead with a four-hour stoppage on Friday, even though a train strike has been called off.

The Rail, Tram and Bus Union (RTBU) agreed to return to the negotiating table with Metro Trains, but Yarra Trams staff still plan to walk off the job from 10:00am to 2:00pm on Friday, in a dispute over pay.

The RBTU is seeking an 18 per cent pay rise over three years for staff, but has only been offered 14 per cent over four years by train operator Metro.

Public Transport Minister Jacinta Allan said talks would resume at 9:00am on Wednesday.

"This is a significant step forward," Ms Allan said.

"Both parties are demonstrating as a sign of good faith that they want to see this matter resolved through negotiation and that's always been the Government's view."

Ms Allan said they were concerned that the travelling public was not "unfairly and unnecessarily" punished and that the talks would be resumed in a "positive and pro-active" way.

Yarra Trams talks stalled

The union's state secretary, Luba Grigorovitch, said Yarra Tram's offer was still not good enough and the tram strike would go ahead.

"We're still continuing the stoppage with Yarra Trams, because they are yet to make much progress," she said.

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"However Metro has given us a commitment that they will recommence negotiations tomorrow morning, and also will give us an improved offer by 5:00pm on Friday."

Yarra Trams has appealed to Fair Work Australia to ban the industrial action, with a hearing due to take place on Wednesday.

The company said it was "disappointed" the action was still planned to go ahead.

"We regard the threatened industrial action as unnecessary and remain committed to reaching a fair and balanced agreement and keeping trams moving so that people in the community can continue their lives as normal," Yarra Trams said in a statement.

"Yarra Trams is prepared to sit at the negotiating table at any time, day or night, to reach agreement."

The negotiations on the trams enterprise bargaining agreement is part of a separate negotiating process on a different timeline but Ms Allan was confident it would also be resolved.

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"There is still enough time for that matter to also be resolved before the need for industrial action," the minister said.

"I'm very hopeful that through negotiation the tram dispute can be resolved. [The] union demonstrated strong signs of good faith today that they are wanting to get these matters resolved without wanting to see passengers unfairly punished."

If the train talks tomorrow are unsuccessful, Ms Allan said the union would have to reapply for industrial action at a later date.

A union plan to allow two days of free commuter travel as compensation for the strike has also been abandoned and threatened Metro action at Fair Work Australia has also been cancelled.

Metro Trains spokeswoman Sammie Black said barrier gates would be closed and staffed as normal on Wednesday and Friday and customers should touch on and touch off as they usually do.

"Customers can rely on our services running as normal on Friday with no planned disruption to services," Ms Black said.

"We will continue negotiations with the RTBU and work towards reaching and agreement."