NEW DELHI (AFP) - India's oil sector workers called off a crippling strike Friday after the government in New Delhi threatened action to restore normality across the fuel-starved country, officials said.

Thousands of executive-level workers in all state-run petroleum firms have agreed to report back for duty, Petroleum Minister Murli Deora announced in New Delhi.

The strike, launched Wednesday by 46,000 petroleum workers demanding more pay, led to unprecedented fuel shortages across India.

"I am glad they are all back and they will now work on Saturday and Sunday to compensate for two lost days," Deora told reporters.

"Everything will be normal by tomorrow as we would work on a war footing," he added.

The Oil Sector Officers Association, an umbrella of striking workers from 14 state-run oil and gas companies also confirmed the strike had been called off.

"We are withdrawing the strike on Mr. Deora's assurances that the government would consider our demands (for higher wages)," association president Amit Kumar told AFP.

Indian Oil Corp. Chairman Sarthak Behuria said the state-run company will work through the weekend to fill up empty petrol pumps across India.

"The Association was unreasonable. They were holding the country to ransom," he added.

Although overnight talks broke down, workers at one of the companies, Bharat Petroleum Corp. Ltd. (BPCL), earlier Friday decided to walk away from the Association-led joint strike.

BPCL enjoys a 25 percent share of the Indian petroleum goods market.

Earlier Friday, nearly two-thirds of stations in New Delhi were without petrol or diesel, and civilian flights were delayed because of refuelling difficulties.

Similar disruptions were being reported in almost all major cities, officials said.

Petroleum Secretary R.S. Pandey threatened to call in the army as Home Minister Palaniappan Chidambaram told workers to return to work or face "firm action."

Commuters were harried in India's financial capital Mumbai as most pumps ran dry, hitting thousands of taxis and auto-rickshaws that are a lifeline in the bustling city.

Anjan Roy, economic adviser at the Federation of Indian Chambers of Commerce and Industry, said the impact of the strike would be "considerable" and could not have come at a worse time with the global economic slowdown making itself felt in India.

"This is very disruptive for the entire economy," Roy told AFP.

Indian exporters said the two-day disruption had cost them dearly.

"Exporters lost over two billion dollars because of this strike as consignments are either held up at factories or getting delayed," Federation of Indian Export Organisations president A. Sakthivel said.

A nationwide truckers' strike was also under way but the government said it was optimistic the agitation would soon end.