PEORIA, Ill. (AP) _ The United Auto Workers on Friday withdrew unfair labor charges of bad- faith bargaining by Caterpillar Inc., a move analysts said was a big victory for the world's largest heavy equipment manufacturer.

The union said it believes the politics of the National Labor Relations Board would lead to a union defeat on the charges.

And the union, which represents about 16,000 Caterpillar workers in Illinois, York, Pa., Memphis and Denver, said it wants to concentrate on other charges stemming from a 163-day strike and stalled contract negotiations.

Caterpillar said it's pleased the union dropped the charges after the NLRB spent four months investigating them.

''We believe this is a clear acknowledgement that Caterpillar did not commit any unfair labor practices'' in declaring contract talks at an impasse in March and implementing wage and benefit provisions of its final offer in April, the company said.

Caterpillar also declared victory for its strategy of directly contracting union members with information contained in Caterpillar's contract offers when the union refused to discuss them at the bargaining table.

Labor attorney Patricia Benassi said it was a substantial victory for Caterpillar because it means the union has no chance of getting the strike declared an unfair labor strike.

Labor analyst Ronald Peters agreed.

''If they had won, the strike would have become an unfair labor practice strike and any replacement workers hired by the company would be temporary,'' said Peters, director of the Labor and Industrial Relations department at the University of Illinois.

In that case, the union had the option of resuming the strike without fear of losing jobs. It has lost that option.

Caterpillar had threatened to permanently replace all 12,600 UAW members who struck in Illinois before the union ended its strike and returned to work.

The UAW said it will pursue remaining charges it has filed, including allegations the company conducted illegal surveillance during the strike and instituted undue restrictions on union workers' attire in the factories.

The labor relations board has dismissed three other cases filed by the union against Caterpillar.