A plan to invest �450m in the rural post office network has been formally announced by the government.

The consumer group Postwatch and the sub-postmasters union have warned that the cash injection is unlikely to prevent further closures of post offices.

The money will go to the Royal Mail Group, which currently spends �3m a week, keeping 8,500 branches in business.

It will be paid over three years in an attempt to reverse the decline of rural post offices, which caused 441 to shut in 2000.

Royal Mail has tried to stem losses which hit �1.1bn last year.

This multi-million pound package shows our commitment to the rural post office network

Patricia Hewitt Trade and Industry Secretary

The National Federation of Subpostmasters (NFSP) and other key stakeholders will advise on the use of the funds.

Trade and Industry Secretary Patricia Hewitt said: "Post offices play a vital role in many rural communities. They are much more than simply providers of mail services.

"In many places the post office is also the village shop, the local community centre, the business exchange and the bank.

"This multi-million pound package shows our commitment to the rural post office network.

"The money announced today will help to ensure that the village post office remains firmly at the heart of the community."

Shake-up

The cash will allow Post Office Ltd, which is part of the Royal Mail Group and runs the post offices, to try new ways of providing services in rural areas.

Possible options include mobile and satellite post offices, sharing post office premises with other businesses - from pubs to hairdressers, and the modernisation of existing premises.

The shake-up has already started and helped the number of post offices closed last year drop to 194.

But the pace of closure is set to accelerate again from April, with the relaxation of rules forcing benefit claimants to pick up their cash from post offices.

The move, which will save the government �400m a year, will deny post offices their commission fees.

About 3,000 post offices in cities and towns are closing to save costs - about one third of the 9,000 urban branches.