Sidhu, the BJP MP from Amritsar since 2004, on Friday announced that he will start a fast-unto-death from Saturday to seek development of his constituency.
The cricketer-turned-politician called off his proposed fast after Badal sent him a fax Saturday morning, assuring him to look into all the issues of development of Amritsar raised by him.
Sources in the BJP said that Rajnath Singh also communicated with Sidhu after he announced his fast and told him not to go ahead with it.
The chief minister had on Friday described Sidhu's announcement as "unfortunate and unwarranted".
Sidhu, who remained absent from his constituency for nearly eight months, returned to Amritsar earlier this month, and hit out at the Parkash Singh Badal government for not doing enough for the development of Amritsar despite it being a Sikh holy city.
The outburst by Sidhu on the Akali Dal-Bharatiya Janata Party alliance government left the chief minister peeved. Badal even refused to meet Sidhu earlier this week when Rajnath Singh tried to resolve the controversy. The Akali Dal-BJP have an alliance government in the state since March 2007.
After the war of words between Sidhu and Akali Dal leaders, including Akali Dal president Sukhbir Singh Badal, who is also the deputy chief minister, intensified, Sidhu met Rajnath Singh in New Delhi and Chandigarh. Sidhu was asked to "remain silent" on the controversial issues by Rajnath Singh this week.
Sukhbir Badal, who has been showing interest in development projects in Amritsar while ignoring Sidhu, had recently said that Sidhu's issues were an "internal matter" of the BJP since most of the issues pertained to departments handled by BJP ministers in the Punjab government.
"I was directed by party president Rajnath Singh to remain silent. For me, party discipline is on one side and my duty for Amritsar and its people is on the other side.
"Without talking against anyone and without blaming anyone, I have decided to fulfil my duty for Amritsar and will sit on fast unto death from Saturday," Sidhu had said in a statement released by his office here on Friday.