Members of the Maharashtra Federation of Junior College Teachers' Organisation had decided to stage a 'jail bharo' protest at Azad Maidan in South Mumbai if the cabinet meeting failed to bring about a positive result.
Their demands include implementation of three-tier pay scale from January 1996 and restoration of 42 days' leave from 1999.
The cabinet decision is expected to benefit around 20,000 teachers in the state, an official said, after the cabinet meeting.
Members of the Maharashtra State Secondary and Higher Secondary School Principals' Association met state education minister Rajendra Darda yesterday to discuss their demands.
The cabinet also approved the draft of the third state women's policy which aims at ensuring measures for women's development.
In another decision, aimed at providing relief to anganwadi workers who took out morchas and staged protest at Azad Maidan here for their demands, the state cabinet approved payment of Rs one lakh to kin of each deceased anganwadi worker. This measure will benefit around 2.06 lakh anganwadi workers in the state, the official said.