Postal regulator Postcomm has confirmed that Royal Mail will be allowed to increase the price of stamped mail by up to 10% from April 2011 to help it raise up to £280m additional revenue.

In addition, Royal Mail has requested that Postcomm relax price controls in 2011/12 for one year to allow it to generate a further £100m to fund its ongoing modernisation and safeguard the Universal Service provision.

Royal Mail plans to raise the funds by increasing the prices it charges to businesses and for giving DSA competitors access to its network, by as much as 15%. Postcomm said it was "minded to accept Royal Mail’s request", despite the potential negative impact of the plan.

Nigel Stapleton, chair of Postcomm, said there was a broad consensus that the universal service was at risk unless Royal Mail quickly becomes more efficient.

"To help fund Royal Mail’s modernisation, Postcomm has allowed Royal Mail to increase the prices of stamped mail by double the rate of inflation over the past five years," he added.

The announcement comes shortly after the government confirmed that it will press ahead with plans to privatise the ailing postal operator and has led to accusations from DSA providers that Royal Mail is being 'fattened up' to make it more attractive to would-be investors.

In addition to the proposed price hikes, Postcomm said that it planned to give Royal Mail greater freedom to compete in the pre-sorted bulk mail market, where it has lost significant volumes to competitors.