The Tunisian General Labour Union suspended its nearly week-long strike in the impoverished town of Siliana late on Sunday after the national government agreed to remove a local governor.
Over 300 people had been injured in clashes with police over the last week week in Siliana.
The union's regional branch called a strike last week to protest about the area's economic problems, its lack of government investment and the imprisonment without trial of 14 activists for the last 18 months.
But the strike turned into a week-long running battle between stone-throwing workers and police who responded with tear gas and buckshot.
The UN Human Rights Commission criticised police for using excessive force and the ministry of health announced on Saturday that two civilians had each lost an eye from the buckshot.
Union official Ahmed Chafei announced the "provisional suspension of the strike to "test the seriousness of the promises made by the government" to hundreds of supporters.
He gave the regional government 15 days to meet their demands.
"The governor will never again set foot in Siliana. He has truly left and if he returns we will restart the strike," he told the cheering crowd.
Unrest in the poor regions outside Tunis has particular resonance, for it was there that a young man selling vegetables burned himself to death, setting off protests that toppled Tunisia's government in January 2011.
Since then, however, Tunisia's economy has struggled, especially with the economic crisis in Europe, its largest trading partner.
High unemployment and low investment continue to plague interior regions.