The imposition of the new contracts by the firm lay at the heart of a long running dispute, which saw unionised electricians, plumbers, heating and ventilating engineers vote overwhelmingly for strike action twice.

The withdrawal of the contracts follows talks between Unite general secretary, Len McCluskey and Balfour Beatty’s chief executive officer, Mike Peasland.

Unite has now called on the other six building services contractors to follow the lead of Balfour Beatty and withdraw the contracts and the threat of dismissal.

A joint statement issued this morning said: “BBES has agreed to withdraw the BESNA contracts and Unite has agreed not to pursue further industrial action or protest on the basis that wide-ranging talks will now take place on modernising the industry.

“Both parties are committed to high level talks within an agreed timeline with the aim of creating new proposals and ensuring agreed terms are honoured.”

Balfour came under increasing pressure to climbdown after a high court bid to block planned strike action failed earlier this week and high profile demonstrations by rank-and-file workers also spread to engineering construction sites.

The leader of the US Teamsters union James Hoffa also waded into the ongoing dispute this week.

He wrote to Balfour Beatty chief Ian Tyler warning that if the dispute was not resolved to the satisfaction of union colleagues in the UK he would have no option but to demonstrate the Teamsters support.

Balfour was one of seven construction firms who sought to tear up the long-standing Joint Industry Boards agreements and impose a new semi-skilled grade.

Unions claimed the new contracts would have led to pay cuts as a new grade took work from higher paid electricians. But the Heating and Ventilating Contractors Association, which aims to oversee the new industry agreement, argues no workers would be worse off.

Len McCluskey, general secretary of Unite, said: “Balfour Beatty’s decision to withdraw these contracts, the threat of dismissal and to enter high level talks is a welcome move.

“Not only is it a victory for common sense, but is testament to the resolve of hard working construction workers who have stood shoulder to shoulder to defend their livelihoods.

“Continuing to impose these contracts would have resulted in a race to the bottom that would have been bad for the industry.

“We expect the other six construction firms to see sense and follow Balfour Beatty’s lead in talking seriously about securing livelihoods and bringing stability to the industry.”