The governor of Papua New Guinea's Madang Province says the landowners have restored water supplies to the township and have withdrawn their threat to stage a protest march tomorrow.
James Yali says the landowners have also agreed to a special forum this weekend to discuss their concerns which include compensation for land taken during the German colonial period for Madang town.
Landowners shut off Madang's water supplies twice this week forcing the closure of schools and businesses in protest at the land seizure.
They are also calling for the eviction of thousands of squatters on traditional land.
Mr Yali says the landowners do not want monetary compensation but to be included in the economic development of the province.
"They're saying that land rates which are collected by the state - some portion of it should be shared with the landowners and business developments that can mean and take place in Madang town should first and foremost give consideration to the landowners for employment and other opportunities."
Governor Yali says the eviction of illegal squatters in Madang is before the courts after a settlement group successfully applied for an injunction on the exercise.
Mr Yali says a court ruling is expected within the next two weeks.