Yesterday, private investors were informed of their allocation, which was scaled back to 227 shares (£749.10 worth at the 330p offer price) for applications up to £10,000; those who applied for more than £10,000 of shares received nothing.

The IPO was hugely oversubscribed, with 700,000 private investors applying for the retail portion of the offering, which comprised 30% of the shares being sold (the remaining 70% went to institutional investors).

According to BBC business editor Robert Peston, investors applied for a combined £27bn worth of shares, which at the top of their 260-330p offer range were priced at just £1.7bn. This has inevitably lead to repeated claims that the government priced the offering too cheaply.

Peston said: "A 36% gap between market price and privatisation price is far wider than would normally be thought necessary to whet punters' appetite for future privatisations."

However, business secretary Vince Cable told the Today programme that the majority of the shares had gone to "long-term stable investors", adding that where the share price settled in three or six months' time was more important than any short-term volatility.

"You get an enormous amount of froth and speculation in the aftermath of a big IPO of this kin," he said. "The bulk of the shares have gone to long-term institutional investors, stable investors, some overseas investors, but mainly British pension funds and insurance companies who are there for the long term.

"The objective of the exercise, which fits in with what we want for the Royal Mail, is to make sure it has stable, long-term investors."

So far the government has sold a 52% stake in Royal Mail and given away a further 10% to Royal Mail employees, each of whom have received around £2,200 worth of shares (except for the 371 of Royal Mail's 150,000 employees that opted out of the share offer).

According to Peston, around 15,000 Royal Mail employees applied for shares worth a combined £52m in the retail offering (on top of their free allocation) and have had their applicatications met in full up to £10,000. Royal Mail staff will not be able to sell their shares for 12 months.

Of the government's remaining 38% stake, a further 8% (the over-allotment option) is likely to be sold in the coming 30 days; while the final 30% stake could be sold next summer.

The CWU, which is currently balloting its members for strike action against the privatisation, staged a demonstration outside the London Stock Exchange this morning, with demonstrators dressed as robbers with swag bags representing "private investors being allowed to steal public assets".

CWU general secretary Billy Hayes said: "The massive jump in the share price confirms that the government and its expensive city advisors got the pricing structure wrong and have undervalued this treasured national institution.

"The taxpayer has lost out immediately and we all now face an uncertain future for our postal services which will be run for profit instead of public service. Privatisation is about greed."