Private companies are to be allowed to compete with the Post Office to sort and deliver letters under radical new plans unveiled by the regulator Postcomm.

The move, which will begin with high volume business mail being opened to competition, could speed up job losses at Consignia.

The firm, which is losing £1 million a day, insists that it needs more time to prepare for the move, arguing that it could threaten universal delivery.

Ministers say the matter is between the regulator and postal firms although they are said to be keen to avoid industrial unrest.