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BT and the Communication Workers Union (CWU) have reached a deal on staff pay, averting the threat of strike action.

The agreement will see BT workers receive a 9.3% pay rise over 39 months, the two sides having failed to reach agreement on a one or two-year deal.

BT had previously offered a 5.1% rise over 21 months; the CWU had wanted a 5% rise for 2010-11 alone.

The company described the deal as "unprecedented" while the union said it was "fantastic" for its members.

Under the agreement, staff will receive pensionable pay rises worth 3% each financial year from April 2010 to March 2013, with the rise being backdated to January 2010.

CWU deputy general secretary Andy Kerr said: "This is a fantastic deal for our members, providing a fair rise in their basic pay this year and for the following two years.

"This deal is among the highest pay settlements in the country this year, recognising the contribution of staff and BT's success over the last year."

Shares in BT rose 2.3% to 139.1p shortly after the announcement was made.