The contractors are understood to have admitted liability for the crumbling road surface in Princes Street and will foot the bill for digging up the section for a second time.

The German-led consortium ordered staff to down tools in protest at a dispute which flared up more than two years ago.

A “ceasefire” in this dispute between the project’s contractors and client Transport Initiatives Edinburgh resulted in apologies from all involved at a press briefing yesterday.

The row has pushed the £545m project seriously over budget and behind schedule.

The full outcome of mediation talks will be revealed within the next week.  

Martin Foerder, project director for Bilfinger Berger said:  “The current situation on Princes Street is not satisfactory for anybody.

“In light of the risk to public safety, we will plain up the road surface either side of the rails by 250mm and re-concrete it.  “We will use block concrete which will be able to cope with the extreme high bus use of the road.”

He added in a statement: “I look forward to being able to announce shortly the plans for the remaining works still to be undertaken which will see trams running from the airport to the city centre.”

It is hoped the route will be finished by the end of 2013.