Over the past month, officers have been participating in 19 work bans including attempting to drive down revenue from traffic cameras as the union pushed for nine hour shift lengths and a four per cent pay rise.
Police Association secretary Wayne Gatt said industrial action had been called off after Victoria Police committed to implementing the shift length.
But the wages dispute has not been resolved.
Negotiations between the union and Victoria Police will continue in 2024 and in the meantime members will receive a 1.75 per cent "good will" pay rise, Mr Gatt said.
He described it as a significant step but warned the union reserves the right to resume action at any time.
"This is just a pause on industrial action because we've seen a breakthrough on a key issue," Mr Gatt told 3AW radio.
"But we still have plenty of work on these other issues that we need to progress."
Victoria Police said it had signed an agreement to extend the current enterprise bargaining agreement until May and would continue to negotiate in good faith.
"During this time we will explore the feasibility of implementing nine-hour shifts for police provided it can be achieved within agreed rostering principles, current resourcing levels and government wages policy," a spokesperson said.
A planned vote on stepping up industrial action was set to open on Christmas Eve, however the union has scrapped that ballot.
If successful, it would have resulted in most speeding drivers escaping penalties and changes to policing of major events including the Australian Open.
Health minister Mary-Anne Thomas described it as a great outcome.
"I thank Victoria Police and the Police Association for the agreement that has been reached to extend the existing (enterprise bargaining agreement) and to have a payment in place that recognises the good faith negotiations that are underway will now continue," Ms Thomas told reporters on Wednesday.
Opposition health spokesperson Georgie Crozier said the dispute should never have reached this point.
"Police who do an extraordinary job on behalf of the community shouldn't have been strung along for so long," she said.
"It's a really sad state of affairs that the police force have had to go to the length that they had to."
Annual wage increases for public sector workers are capped at three per cent in Victoria.
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