Israel's government and largest labour union reached an 11th-hour wage deal Wednesday to prevent a paralysing general strike that had threatened to disrupt travel for thousands of pilgrims at Christmas.

All members of the Histadrut labour federation -- including workers at Tel Aviv's Ben Gurion international airport, government offices, hospitals, schools and public transport -- had been due to begin striking at 6:00 am (0400 GMT) Wednesday.

But an agreement was struck between Finance Minister Moshe Kahlon and Histadrut chairman Avi Nissenkorn just three hours before the walkout was set to begin.

It gives public sector employees a 7.5 percent salary raise spread out over 3.5 years, a ministry statement said.

Public sector employees will also receive a 2000 shekel ($510, 470 euros) grant in two payments.

The wage benefits will apply to nearly half a million employees, a Histadrut spokesman told AFP.

Wadie Abunassar, a spokesman for local Christian groups, had on Tuesday pleaded with Nissenkorn to exempt air travel from any strike action.

"That is in order not to hurt the thousands of Christian pilgrims who are due to arrive here for Christmas and hundreds of Christians from Israel who are to travel abroad for the holiday," he explained.

The Manufacturers Association of Israel had warned that the strike would cost the economy 900 million shekels ($230 million, 210 million euros) on its first day alone.