Postal workers were praised - as they vote on strike action

But the troubled Royal Mail was warned it was still likely to miss many of its other targets.

The figures were released a day after staff began voting on a national strike, following the collapse of talks with management over a pay deal.

The postal service's own statistics said 93.2% of first class letters were delivered on time in June, the highest figure since the summer of 1998.

This put it on course to meet the end of financial year target of 92.5%, it said.

Industry watchdog Postwatch said the postcode area that performed the best was Sheffield at 96.9%, while the worst was south west London at 87.5%.

All this will be thrown away if there is industrial action Adam Crozier, Royal Mail chief executive

Special Delivery post arrived on time in 99.2% of the time, while 98.6% of second class post was delivered on time - ahead of the end of year target of 98.5%.

Postal chiefs praised employees for working hard to deliver better results, but chief executive Adam Crozier warned that the current threat of strikes was undermining customer confidence.

"Our people are working hard to continue driving the results in the right direction," he said.

"The latest figures show that their efforts for our customers are paying off."

But he said the improvements would be "thrown away" if postal workers went on strike in a dispute over pay.

Strike threat

Consumer watchdog Postwatch welcomed the improvement in first class deliveries, but pointed out that a million letters were still not reaching their destination the next day.

"Royal Mail is likely to struggle to meet the majority of its targets this year even without a strike," said chairman Peter Carr.

A cheque arriving in the mail on time can mean the difference between life and death for a company British Chambers of Commerce

Ballots on industrial action were sent to 160,000 members of the Communication Workers' Union (CWU) earlier this week. Voting is due to end on 17 September.

Talks between the union and the Royal Mail at the conciliation service Acas were suspended on Wednesday evening with both sides far from reaching a compromise.

Royal Mail bosses urged workers to accept a pay rise of 14.5%.

But union officials are angry at the number of conditions attached to the offer. They also point out that only a 4.5% raise is guaranteed.

Business leaders urged the two sides to find agreement before the strikes went ahead.

British Chambers of Commerce policy adviser Matthew Knowles said: "A cheque arriving in the mail on time can mean the difference between life and death for a company, especially a small firm.

Losses trimmed

"We hope that a stoppage can be averted and, if not, the Royal Mail's contingency plans can take up the slack."

Neil Bentley, CBI Head of Employee Relations, said: "We urge the unions not to take strike action. Clearly a strike would be damaging for the businesses that rely on postal services.

"It's in everyone's interests that an acceptable solution is found and disruption avoided."

We urge the unions not to take strike action Neil Bentley, CBI

The Royal Mail has indicated it is preparing for months of action, with strikes possibly leading up to and beyond Christmas.

The dispute comes as the loss-making firm is struggling to cut costs and modernise in the face of growing competition from private sector postal operators.

The company, which has managed to trim its daily losses to about �750,000 from about �1.5m two years ago, wants to cut up to 30,000 jobs.

It also wants to scrap the second daily postal delivery in an effort to shore up its finances.