The governments move came after the labour commissioners office reported that last weeks conciliatory talks between the management and the union had failed.
The workers are to be allowed to enter the factory and work without any condition or undertaking from them, PB Ramamurthy, who is holding additional charge as principal secretary of the labour department said.
Toyota had lifted a week-long lock-out on March 24, but its workers union had complained that a lock-out situation persisted as they were not allowed to join work without each member signing a good conduct undertaking.
Toyota had asked for the undertakings as a condition for lifting the lockout, which it had declared on March 16 saying that few of the union members were disrupting work after protracted wage negotiations had proved inconclusive.
The union, whose members have been on a relay fast for the past week, is also asking the management to revoke the suspensions of 30 workers.
The government of Karnataka, in order to maintain industrial peace and harmony, has issued an order asking the company and the union to restore normalcy in operations, immediately, said a statement from Toyota.
All relevant issues, between the workers and the management have been referred for adjudication.
The issue of the good conduct undertaking has also been referred for adjudication, said Satish R, general secretary of the Toyota Kirloskar Motor Employees Union, which has around 4,200 members. The union will hold a general body meeting on the further course of action, he said.
Since March-end, Toyotas two plants have been running on a single shift and its vehicle production levels were down to half of its installed capacity of 700 vehicles daily as the factories were being run using non-unionised staff such as supervisors, engineers and contract workers.
The waiting periods for its vehicles, meanwhile, have increased to 45 days from 25 earlier.