Hundreds of Arriva bus drivers are set to stage a week-long strike in January.
The Unite union said drivers in Teesside, County Durham, and parts of North Yorkshire are the second-lowest paid in the country, and it is seeking a rise of £1 an hour.
A planned strike on 16 December was postponed, but a revised package has now been rejected and a walk out will start on 6 January.
Arriva said it had made "considerable concessions" in the pay talks.
The union said the revised package, which included 75p on the hourly rate over two years in four instalments, "failed to bridge the pay gap".
Regional officer Bob Bolam said: "Our members can't endure this glaring pay inequality - the ball is now very much in the management's court.
"However, we appreciate the great inconvenience that the strike will cause to the travelling public in early January and, because of that, Unite is ready to hold constructive talks over the holiday period."
Nigel Featham, head of Arriva buses in the region, said: "Arriva has done everything in its power to avoid this outcome, having made considerable concessions in pay talks.
"Industrial action will achieve nothing but misery for the travelling public.
"Our offer, the best made to our drivers in modern times, remains on the table."