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UNI Post & Logistics UK affiliate, the CWU said it welcomes Royal Mail's doubling of profit as proof that the company can be a successful market leader and modernise under full public ownership.

Dave Ward, CWU deputy general secretary, said: "We feel vindicated by today's results for our position on full public ownership for the company. While private mail companies, including TNT, have seen huge profit reductions, Royal Mail's operating profit has doubled.

"We believe investment in and the pace of modernisation needs to now be stepped up. It's crucial that upgraded machinery for automated sorting is rolled out and further modernisation to products and services brought in.

"We also expect the company to change its position on a pay freeze for staff. Royal Mail is making record profits so postal workers should be rewarded for their contribution to the success of the company. A pay freeze is not defendable in this situation.

"Today's results make it easy for the government to back the pensions element of the Postal Services Bill and drop the privatisation part. The public, MPs and postal workers want the government to see sense and keep the postal service public."

But postal workers from 160 workplaces in the Greater London area are being balloted for strike action over Royal Mail's cuts in services to the public and their jobs, terms and conditions.

Royal Mail is imposing 10 per cent arbitrary cost savings on all offices, regardless of workload and without the introduction of machinery or delivery improvements. These cuts are not linked to a modernisation agenda and could cost 1,600 jobs.

Martin Walsh, CWU spokesperson for London, said: "It is clear that Royal Mail is deliberately running down the Royal Mail service ahead of partial privatisation.

"This has nothing whatsoever to do with modernising the postal service as walk sorting machines have still not been introduced despite the funding being available for the purchase of this equipment for the last three years. Instead, this is about the destruction of services, the erosion of full time jobs and reducing the terms and conditions of the lowest paid workers in Royal Mail whilst at the same time managers continue to profit from fat cat bonuses and obscene rates of pay.

"London postal workers want a nationally negotiated Agreement, not a strike."