Interim Transport Minister John Graham expressed relief at the late Wednesday decision by the full bench of the commission after months of legal wrangling.
"This promises an end to disruption for all commuters in Sydney - that's hugely welcome," he told reporters.
"This is a win for Sydney's commuters."
Mr Graham also struck a diplomatic tone saying it would provide both parties time to hammer out an adequate deal.
"This gives us clear air to stop interrupting people's lives and get on with the business of landing an agreement.... but we've got to do it in a way that respects taxpayers and respects the public."
Negotiations for a new enterprise agreement for rail workers have dragged on for almost a year and the dispute has come before the commission several times.
The union initially sought a 32 per cent pay rise across four years, but the government offered 15 per cent for the same period, including a federally mandated superannuation increase.
The Rail, Tram and Bus Union NSW branch secretary Toby Warnes said employees would respect the commission's decision.
"We'll hopefully get back to the bargaining table and there won't be any more industrial action," he said minutes after the decision was handed down.
"We are so close now to a deal, we are excruciatingly close and hopefully we can get it done really quickly," Mr Warnes added.
But in a statement the union said the move by the NSW government set a dangerous precedent, setting "an industrial agenda for aggressive employers" which would be a serious concern for workers everywhere.
"While we are hopeful that the NSW government will see this result as reason to come back to the negotiating table, we are not confident."
Business Sydney said commuters should be rewarded for their patience amid consistent disruptions for months as workers took industrial action that cancelled or delayed services.
"A cessation of hostilities is clearly a good thing but commuters and other rail travellers need certainty that the war won't erupt again," said the group's executive director David Jones.
