BERLIN, Jan 27 (Reuters) - Germany's GDL train drivers' union will call off its industrial action earlier than planned as negotiations with rail operator Deutsche Bahn resume, both sides informed on Saturday.

The strike, the fourth and longest round of industrial action in a months-long dispute over pay and working hours, began at 2 am (0100 GMT) on Wednesday and was set to last until Monday evening.

But the union said it will now end the strike in freight transport on Sunday at 6 pm (1700 GMT) and that in passenger transport on Monday at 2 pm (1300 GMT).

Transport workers across Europe have staged strikes to demand higher wages to cope with the impact of inflation.

"Negotiations are finally back on track. Our customers have planning security and our employees have the prospect of early pay rises," Deutsche Bahn's human resources director Martin Seiler said.

Both parties have agreed to negotiate in private over the next five weeks and there will be no strikes until at least March 3.

The talks will be strictly confidential and the parties will not make any public announcements until they have concluded, they added.

"All the issues were discussed in a constructive atmosphere and moulded into a roadmap for the final negotiations," Seiler added.

One of GDL's main demands is a reduction in working hours to a 35-hour week, from a current 38 hours, while retaining full pay for members of staff.

Deutsche Bahn had rejected this as too costly and said it would need to employ 10% more workers to fill the gap, when industry analysts are warning of skilled labour shortages.

"DB's willingness to negotiate a reduction in working hours for shift workers is of central importance," said GDL leader Claus Weselsky.

(Reporting by Maria Martinez; editing by Clelia Oziel)