All trams will run on Friday, after the Rail, Tram and Bus Union called off its planned four-hour stoppage at the end of a closed-door negotiation session inside the Fair Work Commission.

The breakthrough in negotiations means public transport will run as normal on Friday, following the union's decision on Tuesday to cancel a planned four-hour train stoppage also.

The union had threatened to shut down Melbourne's train and tram networks after negotiations with Metro and Yarra Trams over a new three-year enterprise bargaining agreement broke down.

Both operators took the union to the Fair Work Commission in an attempt to terminate the protected industrial action, however, the industrial umpire did not have to intervene in either case, with parties agreeing to return to the table for talks in both instances.

The union backdown does not remove the threat of future industrial action. A planned tram stoppage on Thursday next week is still possible, unless Yarra Trams and the union can reach agreement.