Updated from 1:47 p.m.

A three-way agreement between General Motors ( GM), Delphi ( DPHIQ) and the United Auto Workers appeared to be a step forward in avoiding a crippling labor strike, but its financial impact on the world's largest automaker remained unclear.

The deal, which is subject to approval by a bankruptcy court, would offer financial packages to more than 125,000 hourly workers at GM and its bankrupt parts supplier in return for their early retirement. GM said it plans to offer packages to all 113,000 of its U.S. workers represented by the UAW, but it didn't say how much it would offer them and it provided no estimates as to how many might accept. Still, the company called the attrition plan an important part of its turnaround.

At Delphi, as many as 13,000 workers will be offered a lump-sum payment of $35,000 to retire or leave. GM, the onetime parent of the company, agreed to shoulder the payments. The deal also allows up to 5,000 Delphi workers to return to GM through September 2007.

GM, which is partly liable for the auto-parts supplier's bankruptcy, depends on Delphi as its largest supplier. A labor strike at Delphi would cause a crippling financial blow for the automaker as it struggles with its own burdensome cost structure and dwindling market share. It posted a loss of $10.6 billion for 2005, and it's planning a restructuring of its North American operations that will eliminate 30,000 jobs and idle a number of manufacturing plants by 2008.

"This was a three-way agreement about how to handle the guarantees that GM made when they spun off Delphi," says David Healy, analyst with Burnham Securities. "What remains to be settled is the fact that Delphi's management wants a 60% cut in wages for hourly workers. The UAW is strongly opposed to that, so there's still a possibility of a strike if they can't resolve that. But this is certainly a step in the right direction."

Delphi said separately that it wants to reach an agreement with the UAW on lowering wages and benefits by March 31. Otherwise, it will ask a judge for permission to impose changes, which could then trigger a walkout.

In addition to the lingering threat of a strike, this deal raises the prospect that GM could be making large cash payments to retiring workers in the future, and Wall Street is struggling to gauge the financial consequences.

"In many ways, this deal raises more questions than it answers at this point," says Morningstar analyst John Novak. "They haven't provided any details of what they're offering, so it's tough to calculate the economic impact this could have without putting any numbers around this."

Last week, GM estimated that its obligations to Delphi employees and retirees who worked for the company before the unit was spun off in 1999 would cost between $5.5 billion and $12 billion. It has already taken a $3.6 billion charge related to the bankruptcy.

Delphi described Wednesday's agreement as a "critical milestone" in its restructuring. It marked the first real signs of cooperation between the companies and the union in months.

"We remain focused on the transformation of Delphi in order to emerge successfully from the Chapter 11 reorganization process and provide a strong foundation for our future," Delphi said. "An accelerated attrition plan will help enable the transformation of our U.S. manufacturing and support operations into a much more competitive cost base."

"This is just a start in this process, but it's a great start, and it alleviates a lot of the worries out there that Delphi workers would strike," says George Mangliano, director of automotive industry research with Global Insight. "This doesn't wipe out all the concerns, but it lowers them quite a bit."

Shares of GM were recently up 33 cents, or 1.5%, to $22.33.