A trustee on the pension fund revealed that a letter warning about the state of the Royal Mail's pension fund deficit had not been cleared or even discussed before it was sent to Business Secretary Lord Mandelson.
The Government used the letter to back up its argument that plans for a partial sale of the service had to go ahead.
In the letter, Jane Newell, chairman of the Royal Mail trustees, said the previously-quoted deficit of £5.9bn could be much higher, threatening future payments to postal workers.
She said in the letter that trustees were in favour of recommendations from last year's Hooper report which called for a private company to be given a chance to bid for up to a third of the Royal Mail's business.
But one of the trustees told the Press Association that neither he nor any of his colleagues had even discussed the Hooper report and he knew nothing about the letter.
"The first I heard of it was when I turned on the radio this morning. I have spoken to other trustees and none of them have seen the letter. It is outrageous."
The trustee, who wanted to remain anonymous, said he believed the letter had "overstepped the mark" and he questioned some of the details included in the note.
"There is a political dimension to this letter. There is a meeting of the trustees next week which is now going to be very interesting."
More than 500 postal workers from across the country packed into Westminster central hall to hear a succession of speeches from union leaders and Labour MPs attacking the Government's plans.
Billy Hayes, general secretary of the Communication Workers Union, which organised the protest, said: "Today is about people's democracy against the political elite."
Mr Hayes said the Labour Party had a manifesto commitment not to privatise the Royal Mail, which was now being threatened by Lord Mandelson's plans.
He accused the Business Secretary of "political cowardice" by bringing forward the bill into the House of Lords on Thursday.
"We are being bullied and threatened. We are up for modernising the Royal Mail but we will not stand by and see the industry privatised."
Former Labour MP Tony Benn told the rally: "This is a very big issue and it is a battle we have got to win. This is not about modernisation, it is about privatisation."
Tony Woodley, joint leader of Unite, said privatisation had "ruined" Britain's railways, had led to utilities ripping off the public and should not be extended to the postal service.
"You would have thought that the Government had learned its lesson. The attempt this morning by Mandelson to blackmail MPs into submission is a disgrace. We need more public ownership, not less."
Labour MP Katie Clarke said she felt angry that she had to appear at the rally to defend Labour Party policy.
"It is an outrage that the solution to the Royal Mail's problems is suggested as privatisation - especially after everything we have seen.
"This is not about a 30 per cent stake - it is about who is going to run the Royal Mail and in whose interests. It is absolutely appalling that the pensions deficit is being trundled out today as a reason why it is necessary to bring in a foreign company.
"Every public sector and private sector pension scheme has a problem - but it is a completely different problem to modernising the Royal Mail. We will do our best to stop these stupid proposals."
Paul Kenny, general secretary of the GMB, said the Government's plans were "lunacy" and he pledged support from the entire trade union movement for the campaign to keep the Royal Mail wholly owned by the public sector.
Dave Ward, deputy general secretary of the CWU, accused the Government of "betrayal", saying ministers had let down their own party as well as the British people.
Lord Mandelson said: "The top and bottom line is that our policy will keep Royal Mail in the public sector and our legislation will make this clear. But the Royal Mail will run out of money to sustain its current universal, six day service unless its pension fund deficit is solved and its business transformed.
"If the taxpayer is going to pay for the pension fund deficit, the taxpayer must get back a full, improved letters service in return.
"The Government cannot do one without the other. The Royal Mail's workforce will have a secure pension if the other changes are made. That is the deal on offer and I hope the CWU will think carefully before rejecting it."
The Scottish National Party's postal affairs spokesman, Mike Weir, said: "Lord Mandelson is on a collision course with his own party over these privatisation plans, and thinly veiled warnings over Royal Mail's pension fund will backfire badly.
"This debate is about Royal Mail, not blackmail, and if anything the situation with Royal Mail's pension fund actually reinforces the case against bringing in a private partner.
"The pension situation will have to be dealt with regardless, and if that is left to a private firm it will mean job losses, service cuts and a deterioration in the working conditions of postal workers.
"By inviting in a private partner Lord Mandelson is opening the way for full privatisation, and he must be stopped in his tracks."
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