The Postal Services Commission, or Postcomm, said the mail monopoly was no longer justified and called for the market to be opened up in three steps, with full liberalisation by 2006.

He believes that competition will force Consignia to change and will thus "secure both its own future, and the universal [mail] service".

Fearing the cherry-pickers

But in Consignia's eyes, this calculation does not add up.

The company is already losing up to �1.5m a day - about �1m on letter deliveries alone.

According to Consignia, it spends 28p on delivering a 27p first-class letter.

Consignia's new chairman Allan Leighton said the Postcomm proposal would allow competitors to "cherry-pick the profitable parts of our business, which substantially pay for the 'one price anywhere in the country' promise of universal services".

Despite recent tensions over pay and job cuts, trade unions back Consignia's management on this issue.

Billy Hayes, general secretary of the Communication Workers Union, believes that the proposal amounts to the "irresponsible wrecking of a public service".

"The regulator appears to have no concern for the industry it is supposed to protect and improve", he said.

Blow for the countryside

Rural areas like Wales, Cornwall or the Scottish Highlands could lose out, John Thurso, Scottish affairs spokesman for the Liberal Democrats, has warned.

"The inevitable result of Postcomm's changes would be a combination of increased postal charges and an end to door-to door deliveries in high-cost, mainly rural areas".

But Peter Carr of consumer group Postwatch welcomed the three-stage plan.

He believes it will prod Consignia into action to "get its act together".