Canada, the reigning Olympic champions, are due to face the United States in their first game of the SheBelieves Cup, which begins on February 16, with Brazil and Japan also participating.
Captain Christine Sinclair said on Friday the team would go on strike with immediate effect because of pay equity concerns and budget cuts by Canada Soccer.
But the team said on Saturday that Canada Soccer considered their job action to be "an unlawful strike" and would take legal action if the players did not return to training and commit to playing in Thursday's game against the US
In a statement, Canada Soccer said "the players, while having taken job action, were not and are not in a legal strike position under Ontario labour law."
The team statement read: "They would not only take legal action to force us back to the pitch, but would consider taking steps to collect what could be millions of dollars in damages from our Players' Association and from each of the individual players currently in camp.
"As individual players who have received no compensation yet for any of our work for Canada Soccer in 2022, we cannot afford the risks that personal action against us by Canada Soccer will create.
"Because of this, we have advised Canada Soccer that we will return to training (Sunday) and will play in the SheBelieves Cup as scheduled."
The statement added that the team believes the budget cuts by Canada Soccer before they prepare for the July 20-August 20 World Cup are "unacceptable" and urged the governing body to do more to support the team.
Sinclair said the team was being "forced back to work for the short term".
"This is not over. We will continue to fight for everything we deserve and we will win. The SheBelieves (Cup) is being played in protest," Sinclair said on Twitter.
Canada Soccer, which met with the Canadian Soccer Players Association on Saturday, said it "has committed to a path to addressing each of the demands made by the players."
"But Canada Soccer knows that is not enough. There is still work to do," it added.
(Reporting by Manasi Pathak in Bengaluru; editing by Christian Schmollinger)