Consignia has lifted the threat of massive job losses for postal workers, it was announced on Friday.

The company had announced that it is to cut up to 30,000 jobs in a bid to reduce costs over the next 18 months.

Formerly known as the Post Office, it has seen profits tumble over the past two years and needs to dramatically cut costs if it is to survive in its current form. The company was delivered a further blow, when it lost the contract to deliver the television licences.

Speaking to a House of Commons select committee, John Roberts, the Consignia chief executive, said that the company needed to meet cost-cutting targets of £1.2 billion by April 2003.

It had been previously thought that the company was to cut 15,000 jobs.

However, the firm's bosses said that they would be able to reduce staff through natural wastage and voluntary redundancies.

Stiff Opposition

The move was met with stiff opposition from trade unions, who threatened to take industrial action. John Keggie of the Communication Workers Union warned that the job cuts could badly backfire.

"Cutting 30,000 jobs would be a huge chunk of the workforce. It is extremely disappointing that the board has refused to share this kind of information with the union. It is a Harry Potter figure and it is not on. There is no prospect of the union accepting this level of cuts," he said.

The shadow trade secretary, John Whittingdale, said the government had to shoulder the blame for Consignia's woes.

"Ministers are saying it has greater commercial freedom but it is half in the public sector and half in the private sector and that has contributed to the problem," he said.

Martin O'Neil, the chairman of the trade and industry select committee, warned the company against adopting a "macho" attitude to the situation.

"I am worried that if they carry through cuts of this scale that they may not be capable of introducing changes in work practices which are just as important to secure the kind of cost savings and efficiency improvements the Post Office requires," he said on Wednesday.

The prime minister, speaking at question time, said that job losses implemented by Consignia was regrettable but stressed it was a matter for the company and the unions.

Charles Kennedy, the Liberal Democrat leader, described the news of job losses as "shocking".

"There will be rightful dismay in the country that 30,000 job losses aren't considered a matter even for consultation with the Government of the country, " he said.