However, union leaders for the striking 30,000 workers and 15,000 contract workers warned that their decision is based on a commitment to help the state withstand a cyclone due to land on the coast, New Delhi TV reported.
"We haven't called off our strike completely. It's only temporary in view of the cyclone threat," a union leader said.
Parts of southern Andhra Pradesh and coastal regions were plunged into darkness earlier this week after the state-employees declared a strike to protest the decision by the Congress Party's federal Cabinet in New Delhi to split the state.
Power cuts crippled hospitals, trains and cell-phone services in eastern parts of the state, The Economic Times reported.
Many hospitals were operating by candlelight and supplemental and portable power generators.
A breakthrough to end the strike was reached between union representatives and Andhra Pradesh Chief Minister Kiran Kumar Reddy, who heads the Congress Party government.
The controversial decision by the union government -- as the federal government is called -- will create Telangana state, a land-locked homeland for the Telangana-speaking people.
But the proposal must be put in a draft bill to be passed by Parliament in New Delhi before Andhra Pradesh, on the Bay of Bengal, can be split.
The decision also was greeted by street demonstrations in Vizianagaram town.
Protesters there defied a curfew imposed this week and engaged police, who had shoot-at-sight orders, The Hindustan Times reported. Among the properties attacked were those of the head of the Andhra Pradesh Congress Party.
Police fired rubber bullets to disperse protesters in the town of Kothapeta and used batons against a mob in Palliveedhi.
Protesters against the carve-up are calling what would be left of Andhra state Seemandhra, the accepted name of the combined regions of Rayalaseema in southern Andhra Pradesh and the regions north along the coast.
The new state would be India's 29th state and have a population of more than 35 million within its 44,300 square miles, a 2011 census indicated.
Under the Congress Party's proposal, Andhra Pradesh's capital and India's sixth-biggest city, Hyderabad -- a magnet for IT research and pharmaceutical investment dollars -- will be included in the new state but serve as joint capital for at least a decade.
The union government ruled out reconsidering its plans, reported the Economic Times.
"I don't think there is any possibility of going back," Home Minister Sushilkumar Shinde said.
Protesters have included local and state politicians from smaller parties, including the head of the Youth, Labor and Peasant Congress Party, Jagan Mohan Reddy.
Reddy had been in his office on a hunger strike for five days to protest against the bifurcation of Andhra Pradesh.
But police forcibly moved the 40-year-old politician to a hospital on Wednesday night amid concerns about his health.