Every mother collecting child benefit is being handed a packet of Nestle's Cheerios, described as a high sugar cereal by the Consumers' Association.
The Post Office did not consult other government or health agencies before associating itself with the product, and refuses to say how much Nestle is paying.
Labour's consumer affairs spokesman, Nigel Griffiths, says he is very concerned and will next week demand the Post Office disclose its earnings from the venture. "Nestle has an unfortunate history of promoting products, from baby milk to sweets, to potentially vulnerable groups," he said. "One of the drawbacks of putting the Post Office at arms length from government is that key bodies are not consulted about things like this."
One mother who queried the surprise gift at a north London post office was told by the counter assistant: "I can't say anything." The product was simply handed over the counter with the child benefit money. The mother was not given the option of refusing and further queries would have held up a long queue.
Nestle says the deal was initiated by the Post Office and is attractive because it promises effective targeting of a precise consumer group.
According to Aspen Specialist Media, the agency responsible for selling Post Office services, another key factor is the location itself: people trust and respect the Post Office. The 1,500 main offices have contact with 28 million people per week.
"We have close links with government departments as they use Post Offices as information shops. The post office is very trustworthy and has large volumes of people," said sales director Julian Clogg. "This type of sampling is unique as it takes place in a shopping environment. Nine out of 10 recipients are about to go shopping," he said.
According to the Consumers Association, 61 per cent of shoppers consider nutrition and health when food buying, so any imagined endorsement of nutritional claims is a serious matter. The Cheerios packet says it consists of "wholegrain cereal rings" and is a "good source of fibre". In fact, Nestle is almost unique in Britain in the way it measures fibre content of some cereals, Cheerios included.
Unlike most other brands which use the government recommended (Englyst) method, Nestle Cheerios use an alternative legitimate method (Association of Analytical Chemists AOAC) which can triple conventional results. "This makes it nigh on impossible for consumers to compare the fibre content of cereals," claims the Consumers Association, who describe it as a high sugar cereal.
Mothers seeking nutritional food that children will eat without a fight are a prime target when collecting benefits. "We are placing it in the hands of someone who is likely to buy the product," said Julian Clogg.
"I find it absolutely extraordinary that an advertising agency can target people according to what benefit they receive," said Dr John Woulds, director of operations at the Data Protection Registrar's Office. "But whatever the ethical concerns it doesn't appear in contravention of data protection legislation."
"If benefits data was supplied for direct marketing, all hell would break loose, but this way doesn't appear to involve any breach of the law," says Maurice Frankel, Director of the Freedom of Information Campaign. "It's riding on the authority of the Post Office as a welfare agency of the government. It's a brilliant coup for Nestle. It's a question of whether this is acceptable to the population."