The new payments system poses a big threat to Post Offices

From April 2003, the current giro cheques and cash order book system will gradually be replaced by electronic payments for virtually all benefits, pensions and tax credits.

People affected are being given three options - payment into current accounts, basic bank accounts or the post office card account.

But the National Consumer Council (NCC) believes the system does not address the needs of most people, and has launched a stinging attack on the changes.

'Real needs'

"The end to cash benefits just hasn't been thought through properly," said Deirdre Hutton of the NCC.

"The new account-opening arrangements take little account of people's real needs and will make it very difficult for people to make the best choice."

Ms Hutton is calling on the government to start a high-profile advertising campaign to help people decide.

The government has been criticised by the National Association of Sub-Postmasters for failing to promote the post office card account.

People who wish to receive their benefits through this mechanism must contact a helpline and request an application pack.

"What makes no sense is that people trust the post office, but they can't open either a basic bank account or a post office card account there," Ms Hutton said.

In a statement issued in response to the NCC's comments, the Department for Work and Pensions said it has worked together very closely with the banks and Post Office on the changes.

"We have discussed the changes at some length with customer representative organisations and have listened to their concerns such as having Post Office access and weekly payments for pensioners."

It added 87% of benefit and pensioners already had a bank account and that changes will take place over a two-year period.