We think it may be duplicating some of the other options which could be cheaper for consumers and for taxpayers

Anna Bradley, National Consumer Council

But ministers have defended the plan, saying it will ensure the survival of rural post offices and help those who are financially and socially excluded from society.

The universal bank - to be set up next year - will offer basic banking services to people without accounts, including those who have been refused accounts in the past.

The move follows a previous government decision to transfer the payment of all social security benefits into bank accounts rather than through the post office by 2003.

The scheme has been criticised in the past because of fears that it is expensive and is unpopular with banks.

Banks 'signed up'

Under the plan, all of the major banks are being asked to contribute to the costs of operating the new service.

Alan Johnson, minister for competitiveness, said most banks had agreed in principle to the scheme - though much of the detail had yet to be worked out.

"We have 11 banks on board in these discussions arguing and discussing constructively how we can tackle the problem of not just 2m to 3m people without bank accounts [but] between 5m and 7m people.

"Those people, because they are financially excluded, are also socially excluded," he said.

But Anna Bradley, director of the National Consumer Council said: "This may not be the most efficient or effective way to deliver what is effectively a public service."

Mr Johnson said banks backed the scheme

She added: "This post office account is going to cost between �300 and �400m as far as we can tell, and we think it may be duplicating some of the other options which could be cheaper for consumers and for taxpayers."

Speaking to BBC News, Ms Bradley expressed concern at the way ministers had drawn up the scheme.

"Our biggest concern is that government is making policy in a rather expedient fashion and this is a very important issue which we need to consider carefully."

In a report, the NCC claims that the scheme has not been thought through properly.

It says: "The National Consumer Council welcomes initiatives that offer disadvantaged consumers a greater range of financial services through a larger number of outlets.

"But this very hurried and ad hoc solution to three complex policy problems - benefits reform, post office modernisation and financial exclusion - is not a good way to make critical public policy decisions about how to guarantee consumer access to essential goods and services."