-- This city's transit workers union agreed to a tentative contract tonight, avoiding a strike that would have shut down the nation's largest subway-and-bus system and stranded more than 7 million passengers.

Transit workers had voted to begin their strike early today, but union officials froze the negotiating clock at midnight as they began to make progress toward a contract. A strike -- illegal under state law -- would have paralyzed the fiscally ailing city and cost businesses an estimated $300 million per day.

City and state officials had asked state courts to levy massive fines against each of the union's 34,000 members. Roger Toussaint, president of Transport Workers Union Local 100, was threatened with jail.

Instead, the Trinidad-born Toussaint posed for the cameras this evening with Peter Kalikow, chairman of the state-run Metropolitan Transportation Authority. The proposed deal gives workers a $1,000 lump-sum payment in the first year, and 3 percent raises in each of the next two years. And, officials said, the contract could help refashion the notoriously hostile relationship between the MTA and the union.

Last year, the MTA brought 1.5 disciplinary actions, on average, against every unionized worker, and the agency's tough sick-leave policy requires that workers out ill must call their supervisor every time they leave their homes. Much of this is expected to change under the new contract.

"It gives me pleasure to announce to the entire citizenry of New York that we have a proposed settlement," Toussaint said tonight. "This proposed contract will go a long way towards modernizing the relationship between Local 100 and the MTA."

The union originally asked for 8 percent raises in each of the three years of the contract, then lowered that to 6 percent last week. MTA officials countered that their agency faces a billion-dollar deficit, and until Sunday night had offered no raises.

The starting salary for a transit worker is about $33,000 a year. Senior workers can make $47,000, not including overtime.

City officials had scurried about, preparing for the strike, in recent days. Ferries were added to the East and Harlem rivers, and the billionaire mayor, Michael Bloomberg, bought a bicycle to ride from his townhouse on the Upper East Side to his office in City Hall.

Many New Yorkers packed running shoes and sweat pants when they left for work this morning. Most hotels reported being booked to capacity Sunday night.

The stakes were no less momentous for the union. Toussaint took office two years ago as a reformer cast in the model of the union's founding Irish radicals.

The rest of the city's unions watched the negotiations carefully; the settlement could set a pattern during the city's fiscal crisis. The city budget is expected to be $4 billion in the red next year.