At the same time, industry sources indicated that the proceeds of an outright sale of the organisation as a single unit might be relatively modest - raising between pounds 1.5bn and pounds 2bn.
Under options currently being studied, the newly-privatised business or the existing organisation could see the existing monopoly on collecting mail from businesses ended, while sorting offices would be franchised through competitive tendering to allow private firms to manage them.
The current pounds 1 upper limit of the Royal Mail's monopoly on post could also be reduced to 50p. In a break with 150 years of tradition, stamps above that value would be likely to carry the country's name instead of the head of the Queen, who cannot be seen to be promoting a private product.
It was the link with the sovereign that apparently persuaded Baroness Thatcher not to sell off the Royal Mail during the mass privatisations of the 1980s.
On this occasion, the Queen has been kept informed, as a matter of courtesy, of all the proposals thrown up by the review of privatisation options announced by Michael Heseltine, President of the Board of Trade, last July. She will, however, follow the normal tradition by giving Royal Assent to any legislation.
Kleinwort Benson, the merchant bank advising the Government, has been grappling with the form that a sale could take, but an announcement expected last month has failed to materialise. Yesterday, Department of Trade and Industry and Downing Street officials said that decisions were 'some way off'.
A pledge yesterday by Mr Heseltine to maintain nation-wide delivery and post office networks and affordable prices, was met with derision by postal workers' unions. Tony Young, general secretary of the National Communications Union, said: 'Every serious deterioration in public services begins with a government minister stating that the customer will not suffer.'
The Government has already said that the Parcelforce arm would be sold separately. There are fears that if the Royal Mail, the jewel in the Post Office crown, were to be sold, it would then launch a parcels service in competition with Parcelforce.
The Government must also decide whether to bundle the Post Office counters business with Royal Mail. While the profits of Royal Mail rose to pounds 131m from pounds 62m in the first half of the year, counters' profits halved to pounds 12m.
While some Tory backbenchers urged yesterday that the Post Office should be broken up to provide genuine competition, others were unenthusiastic about any kind of change. Sir Rhodes Boyson, MP for Brent North, said that the Government should first 'get right' what it was doing already, such as rail privatisation. 'Massive unemployment' was the issue that threatened the Government: 'Everything else should be on the backburner,' he said.
Sydney Chapman, the Government whip who compiles a daily report to the Queen on events in Parliament, said that stamps without the sovereign's head would be 'like the House of Commons without the Mace'.