Louis Lanzano, Associated Press
Bus drivers cheer during a radio address by Roger Toussaint, president of Transport Workers Union Local 100, at the Jackie Gleason Bus Depot in Brooklyn. He declared the strike over and told drivers to go to work.

NEW YORK — Thousands of New York City transit workers put down their picket signs and streamed into bus depots and railyards Thursday night to restart the nation's largest transit system after leaders of their union agreed to a tentative framework for a new contract and ended a 60-hour strike that hobbled the city.

After three frenetic and frustrating days of carpooling, biking, roller skating and trudging to work in frigid temperatures, New Yorkers reacted joyfully to the news that the city's sprawling network of subways and buses would soon be running again. Transit officials said they expected the system would be running at nearly full capacity by this morning's rush hour.

"I'm so happy," said Christine Grant, 34, of Rego Park, Queens, who bought a weekly MetroCard last Monday but never got to use it to commute to her job in Greenwich Village on Manhattan. "You take things for granted until something like this happens and then you realize how much you need the subway."

The abrupt return — many strikers simply lay down their placards and walked into the buildings they had been picketing — capped a day of fast-moving developments in a labor showdown that just a day before seemed headed for an intractable and even angry stalemate.

The outlines of the agreement to return to work, and how close an agreement on the issues that provoked the strike was, remained unclear. But it appeared that the deal involved the authority's agreement not to insist on pension reform and the union's willingness to discuss higher payments for medical insurance, officials said.

Mayor Michael R. Bloomberg hailed the union's decision, a state judge postponed a hearing that could have seen union leaders jailed, and many workers expressed relief that the strike was over.

"In 21 years as a transit worker, this has probably been one of the best days of my life," said Dennis H. Boyd, a train operator and member of the union's executive board, who voted to end the strike. "The membership wanted to make a statement, they wanted to go to battle with the MTA, and we fulfilled that."

The strike — the city's first transit walkout in a quarter-century — paralyzed New York's mass transit system at the height of the holiday season, devastating sales for retailers, enraging the mayor and governor, and making it difficult for New Yorkers to get to jobs, schools and doctors' appointments.

As buses began to warm up Thursday night and workers went about the complex task of bringing the 660-mile subway system back to life — inspecting tracks, testing brakes, restoring power — the mood could not have been more different than it was 24 hours earlier, when many signs suggested the strike could be a long one.

On Wednesday, Roger Toussaint, the president of Local 100 of the Transport Workers Union, had traded barbs with Bloomberg and Gov. George E. Pataki from afar as all three drew what seemed to be deeper lines in the sand. Toussaint said he would agree to talk only if the Metropolitan Transportation Authority would remove the nettlesome question of pensions from the negotiations; Pataki said no talks could take place until the strike ended.

But behind the scenes, both sides were meeting with state mediators. At 2 a.m. Thursday, Toussaint arrived at the Grand Hyatt hotel, where negotiations had been taking place, suggesting major progress was occurring.

Three state mediators conducted an 11 a.m. news conference that gave New Yorkers their first reasons for hope in days.

The mediators said the union's leadership had agreed to send strikers back to work after accepting the preliminary framework in which the transportation authority hinted it might take off the table the main obstacle to a settlement: its demands that future workers pay 6 percent of their wages toward their pensions.

As part of that framework, the union agreed to negotiate over having transit workers pay more for their health coverage to offset the money the authority would lose by relinquishing its pension proposals.

The mediators, led by Richard A. Curreri, director of conciliation for the New York State Public Employment Relations Board, said they expected the two sides to engage in intense negotiations to reach an overall settlement, hopefully in the next few days.

"An agreement remains out of the parties' reach at this time," the three mediators said in a statement. "It is clear to us, however, that both parties have a genuine desire to resolve their differences. In the best interests of the public, which both parties serve, we have suggested, and they have agreed, to resume negotiations while the TWU takes steps toward returning its membership to work." "The MTA," the mediators continued, "has informed us that it has not withdrawn its pension proposals, but nevertheless is willing to discuss whether adequate savings may be found in the area of health costs."

Two officials close to the talks, one on the authority's side and one on the union's, said the authority would soon take its pension demands off the table.

Around 2:30 p.m., the union's executive board voted 36-5 to end the strike. Two abstained. A half hour later, Toussaint, low-key ed in contrast to the defiant tone he took on Wednesday, told reporters and union members gathered in the cold: "I'm pleased to announce that the Local 100 executive board just voted overwhelmingly to direct transit workers to return to work immediately and to resume bus and subway service throughout the five boroughs of New York City, and we thank riders for their patience and forbearance."

The mediators, union officials and the transportation authority all said there was a blackout on news about the negotiations.

As soon as Toussaint made his 3 p.m. announcement, many of the union's 33,700 members put down their picket signs and began heading to bus depots and subway yards.

Even though the strike violated a state law barring walkouts by public employees, many New Yorkers backed the union in its fight with the authority, even as many others criticized the union. As a result of the strike, the union faces a $3 million fine while individual strikers face the loss of two days pay for each day on strike.

Justice Theodore T. Jones of State Supreme Court in Brooklyn had fined the union $1 million a day and originally threatened to have Toussaint jailed on Thursday. However, reacting to the end of the walkout, he adjourned hearings for a criminal contempt order and the possible jailing. He set a new hearing for Jan. 20. He also has the power to alter the fine.

"I am pleased on behalf of the people of the city of New York, and indeed hopeful that we will be able to salvage Christmas," Jones said.

Bloomberg said that as of Friday the city would end its emergency plan that allowed taxis to carry multiple fares, increased ferry service and barred cars with fewer than four passengers from entering Manhattan south of 96th Street during the morning rush.

The agreement framework seemed carefully designed to allow everyone to save face.

After Pataki said the authority should not negotiate until the union ended its walkout, the agreement gives him some cover because the negotiations will not resume until the strikers return to work.

After Toussaint said the strikers would not return to their jobs unless the authority took its pension demands off the table, the agreement allows him to save face because the framework hints strongly that the authority will soon drop its pension demand.

And the authority's chairman, Peter S. Kalikow, can save face because he can maintain that the authority has not taken pensions off the table in response to the union's demand.

While many workers seemed relieved to return to their jobs, there was at least a small undercurrent of anger from some directed at the strike's result.

"I'm very disappointed to have to come back now, I think we should have held out," said Larry Powell, 55, while returning to work at the 239th Street maintenance facility in the Bronx. "I feel bad. I don't know what we got."

He said he was also unhappy about being fined two days' pay for every day he was on strike, adding: "I do not want to go back to work without a contract."

Pataki did not soften his tone, saying that judges could not grant amnesty to erase the individual fines faced by workers. With transit workers' base pay averaging $900 a week, being fined two days pay for each of the three days on strike would cost them $1,080 each on average.

Pataki said: "I think that there's a lesson to be learned from this: no one is above the law. You break the law and the consequences are real."

Before the negotiations collapsed late Monday night, the authority increased its wage offer to a 3 percent raise the first year, 4 percent the second and 3.5 percent the third year. It also dropped its demand to raise the retirement age for future workers to 62, from 55 for current workers. But it added a demand that new workers pay 6 percent of their earnings toward their pensions, up from 2 percent for current workers.

The authority also agreed to make Martin Luther King Jr. Day a holiday for union workers, and it dropped its demand that future workers pay 1 percent of their wages toward health premiums. The union's current workers do not pay premiums for their basic health plan.

Toussaint has said he would steadfastly oppose having workers pay health premiums.

Jose Orjuela, 36, a pre-production manager for a cinema advertising firm in midtown, walked to work this week from his home in Williamsburg, Brooklyn. He celebrated the end of the strike.

"We were all freaking out when we heard," he said. "People were yelling 'about freakin' time.' It was huge. We were just relieved it was all over."