The legislation now has to go to the Senate, where it is expected to pass easily because of the majority held by the governing Conservative Party.

Introducing the legislation on Monday, Canadian Labour Minister Lisa Raitt said she expected trains at Canada's second-biggest railway would start running again on Thursday.

The legislation, if passed by the Senate, would force a resumption of Canadian Pacific rail services and send all unresolved issues to binding arbitration, the government said in a statement on Wednesday.

CP's (CP.TO) freight operations across Canada have been halted for a week after 4,800 unionized employees walked off the job over the company's plan to cut pension payments in their new labor contract.

CP's customers, including automakers, grain groups and miners, whose products are stranded in warehouses, silos or on the railroad's tracks, have urged the government to end the strike.

The government did not need much prodding. Ottawa, which has stepped in to stop labor action on at least four occasions in the past year, fears that strikes at large transportation groups such as CP and Air Canada (ACb.TO) could hurt an economy still recovering from the recession.

Raitt has said a strike at CP would cost C$540 million in economic activity each week.

The union, the Teamsters Canada Rail Conference, and opposition political parties have criticized the government's action and accused Ottawa of trampling on workers' rights.

The Teamsters have been without a contract since December 31, 2011.

The strike comes at a difficult time for CP, whose chief executive and chairman quit less than two weeks ago after losing a boardroom dust-up with the company's largest shareholder.

The shareholder, Pershing Square Capital Management, has vowed to improve CP's operating performance, which is the weakest in the industry.

(Reporting By Nicole Mordant in Vancouver and Euan rocha in Toronto; Editing by Frank McGurty)

• A Permanent Economic Emergency