The cost cuts are in response to competitive pressures from other forms of information delivery such as fax machines and electronic mail. Money will be saved by rationalising administrative tasks such as the computer payroll and managerial jobs will "inevitably go" through natural wastage and voluntary redundancy.
The Post Office employs 13,000 managers in regional and national headquarters offices out of a total workforce of 180,000. The plans will be finalised by May.
However, the programme could prove controversial as it will hit managers at the same time as plans to introduce flexible working affecting the main Royal Mail workforce.
Joint working parties appointed to head off further industrial action over the plans have started meeting, with pounds 30m set aside by the Post Office as an incentive to staff to accept the changes. These could include team working and changes to the way mail is delivered.
Meanwhile, the freeze on postal charges means that prices will remain unchanged for 22 months since the last increase in July 1996, when the price of first-class stamps was raised to 26p. Lifting prices by another 1p this year would have raised pounds 150m. The freeze was made possible because the Government has only marginally increased the cash it intends to take from the Post Office in the coming financial year.