Unionists and their supporters have maintained an around-the-clock presence outside Victoria International Container Terminal (VICT), preventing trucks from accessing more than 1000 stranded shipping containers carrying products including Christmas retail goods, fresh food and medicine, since the start of December.

The picket line was formed in response to the axing of a casual wharf employee who had been leading a union campaign in the workplace.

The company, VICT, said the man had been identified as ineligible for a security clearance required to work at the docks, while the union believed he had been targeted as part of a "union-busting" strategy.

Union officials on Friday confirmed that the picket line would be suspended after the company agreed to reinstate the worker on its books. The company would continue to pay him, pending the outcome of a court case next year, but he would not return to the workplace.

VICT chief executive Anders Dommestrup said the union had agreed to process its claims through the Fair Work Act instead.

"Our employees, who played no part in the illegal picket, will be able to enter our site this afternoon," Mr Dommestrup said.

"We are currently entering the terminal to prepare it for full re-opening as soon as possible and we will inform all our customers directly."

The Maritime Union of Australia said its officials had "productive discussions" with VICT's management on Friday morning, and a "workable solution" was reached.

"This is a welcome circuit breaker and we will continue to work with the company to resolve the many outstanding issues that are still ongoing," union national secretary Paddy Crumlin said.

"The MUA would like to thank the Melbourne community and broader trade union movement for backing this worker in his time of need and standing up for decent pay, conditions and job security for all working men and women."

The union said it "expects that the ongoing community protest at Webb Dock will end some time today".

Victoria's Supreme Court had twice ordered the maritime union to not go within 100 metres of the terminal access gates and to lift the illegal picket line. But the blockade remained in force, and was being referred to as a "community protest" by supporters in the wider trade union movement.

Picketers for two weeks used objects such as chairs and bicycles to block the gates to block VICT's access gates. The picket line escalated on Friday last week when hundreds marched on the Webb Dock site as part of a multi-union demonstration.

Lawyers for the stevedore told a courtroom this week that the blockade was inflicting "immeassurable damage".

VICT had lost $2 million in revenue," said Stuart Wood, QC, "but the damage to its reputation, if not priceless, is worth many, many millions more."

Despite Friday's developments, the company may still sue for damages of potentially more than $100 million.

The decision to break the blockade will also come as a relief to retailers and trucking companies, who had taken a financial hit after trucks were turned away at the waterfront gates.

Victorian Transport Association chief executive Peter Anderson said he was pleased that unions were disbanding their illegal picket.

"It is our hope that normal operations can resume at the terminal as quickly as possible so that freight operators can have access to goods that have been languishing on the dock for too long," he said.

"We applaud both parties for working to achieve a reasonable outcome, and for resolving further matters through the industrial relations system."