The reduction in the monopoly cut-off point from the present limit of pounds 1 is due to be unveiled in a government White Paper in the next few weeks, along with details of a tough new regulatory regime to police the Post Office.
In return, the Post Office will get vastly increased commercial freedom to strike joint ventures with the private sector and mount takeovers of foreign postal businesses.
A cut in the Royal Mail monopoly from pounds 1 to 50p would open up 10 per cent of its business to competition, but Post Office executives believe this proportion could grow as rival operators achieve greater economies of scale.
John Roberts, the Post Office's chief executive, said it was important that the White Paper made clear that the advantages of commercial freedom would not be wiped out by overly harsh regulation of the business.
He said the Post Office was eyeing half a dozen overseas acquisitions following its pounds 300m takeover of German Parcel and the German express carrier, Der Kurier.
Mr Roberts also called on the Government not to scrap the pounds 1.5bn Pathway project to automate social security benefit payments through Post Office Counters.
The national roll-out of the Pathway system, developed by ICL, is due to start this summer but there are fears that the project will be scrapped because of cost overruns.
Post Office executives fear that if the Pathway project is cancelled, the survival of thousands of rural sub-post offices could be threatened, and the organisation's plans to automate its counters division could be delayed by at least three years.
Pathway to hell, page 19