Britain will tomorrow back an Italian compromise proposal which will allow a postal operator in one EU member state to deliver bulk mail in another from 2001. In Britain the business is worth about pounds 1bn a year.
The plan is due to be discussed at a meeting of EU trade and industry ministers in Brussels attended by the UK minister Ian Taylor and is expected to get the go-ahead.
Ministers here said that, far from undermining the Post Office and threatening its ability to keep the cost of other letter deliveries down, the move would provide it with new opportunities because of its greater efficiency.
"This is not about privatisation, it is about liberalisation and the reality is it will enhance the prospects of the Post Office, not damage them," said one source.
Ministers also reiterated they would be prepared to suspend the Royal Mail's monopoly over letter deliveries costing less than pounds 1 if the current postal dispute escalated. It remains unclear how long the monopoly would be suspended and if private operators would be obliged to offer a universal service, although that appears unlikely.