Express Dairies has won a licence to deliver letters and parcels along with the daily pinta.

The scheme will be tiny in comparison with the Royal Mail, which handles some 80 million items a day.

Under its licence conditions, Express Dairies is allowed to deliver only 4.6 million items over the next 12 months, and is to focus on bulk mail from businesses to households.

But the news nonetheless comes as yet another blow to market incumbent and Royal Mail parent company Consignia, currently in the throes of a financial crisis.

Speaking on BBC Radio's On the Ropes programme, Consignia chairman Allan Leighton said the firm would continue to lose some �1.5m a day for the next three years, and pleaded with the government not to privatise it.

Bottles and brochures

Express Dairies feels its new licence is a natural extension of its existing home delivery business, which has grown from bottles of milk into assorted foods, brochures and catalogues.

Rivals are encroaching on postal turf

The firm's 3,500 milk rounds already deliver some 12.8 million pieces of promotional material a year.

It claims to have invested heavily in the sort of technology that allows closer tracking of deliveries, providing "a level of traceability only previously available from much more expensive delivery operations".

This is the latest step in the piecemeal dismantling of Consignia's monopoly.

Industry regulator Postcomm has awarded eight other firms licences to run some form of mail service, most recently to SDS, a credit-card delivery firm.

Public affairs

This erosion of its monopoly is causing something close to panic at Consignia.

Mr Leighton wants to remain public

Mr Leighton has repeatedly urged the government to leave some monopoly protection in place, at least until it sorts its finances out.

This could happen after three years, he hopes, by which time tens of thousands of postal workers will have lost their jobs.

But he told On the Ropes that the firm should not be privatised in the conceivable future.

"I'm prepared to say in my time-scale we will not see the Post Office privatised."