Tranzurban Hutt Valley and Wellington drivers had planned to go ahead with industrial action tomorrow.
The dispute between the Tramways Union and the bus operator comes amid an overhaul of the city's public transport with the new bus network labelled a fiasco.
Late last month drivers voted to strike indefinitely unless they could reach an agreement over working terms and conditions.
The union's Wellington secretary Kevin O'Sullivan said they found a "legal loophole" ahead of the planned strike.
He said, based on legal advice the union received late yesterday, they have deferred the strike until later this week.
O'Sullivan said the union was in negotiations with Uzabus and NZ Bus so the industrial action would only involve Tranzurban drivers.
The union yesterday provided the operator an end date to strike action of November 30, he said.
Tranzurban managing director Paul Snelgrove said the "legal loophole" O'Sullivan referred to was a legal requirement under the Employment Relations Act the union neglected.
He said it requires an end date to be provided with some certainty so there is clarity as to the length of the strike.
Snelgrove said he was confident the company could manage the impact of industrial action.
He said during the stop work meeting when drivers voted to strike indefinitely the company kept virtually all of its services running as normal.
That meeting only affected services between 9am and 3pm.
"We took care of things then and we're confident we can do that again. We've got a great team at Tranzurban."
Snelgrove said all Wellington drivers were paid a standard rate of $22.20 an hour which is above the living wage. He said the company also paid penalty rates for night shifts and overtime.
Meanwhile, a rally has been held at Wellington's Cuba Mall in support of drivers ahead of the proposed strike action.
Philip Darkins has been a bus driver for three years.
He is employed by NZ Bus but said he would still be supporting his colleagues at Tranzurban during his break on Thursday.
"I'm going to be picketing in support of my friends and my colleagues who are working there and suffering some pretty ridiculous working conditions."
He said he was moved when a couple got on his Eastbourne bus at the weekend and told him drivers had their support.
"I don't mind admitting that there was a little tear in my eye as I turned right into Jackson St and thought this is the kind of New Zealand that I want to live in."
Another driver and union delegate Daniel Scotford said there was still an opportunity for Tranzurban to avert strike action if they came to the table.
"But all the indicators are that they're not going to do that but we're still open for them to approach us. The drivers definitely feel that they've just had enough."
Two Wellington city councillors also attended the rally in solidarity with the drivers.
Councillors Fleur Fitzsimons and Sarah Free both donated money to the drivers' campaign fund.
Metlink said it regretted the impact and uncertainty the industrial action was having on its bus customers and would keep them updated as information came to hand.
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