On the day that a bill outlining the government's plans was published, he said the reforms included a commitment to keep Royal Mail publicly owned, but reiterated that a strategic partner was needed to maintain the six-day-a-week, fixed price "universal postal service".

The bill would allow the government to take on the Royal Mail's large pension deficit and comes at a time when, according to Mandelson, the operator has been severely affected by dipping mail volumes due mostly to a rise in e-mails.

He said: "Our policy will keep Royal Mail in the public sector and this legislation makes this clear. 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.

"Faced with this challenge, I am determined to protect the universal service and secure Royal Mail's future."

The Government's policy, which has also appointed Ofcom as postal regulator, follows on from the publishing of the Hooper report in December last year.

Mandelson said: "Royal Mail is lagging behind its international counterparts and this needs to change. A partnership must not just bring access to capital, it must bring expertise. A partner experienced in driving forward change in postal companies will help transform it."

Earlier this week, Royal Mail workers rallied in Westminster's Central Hall to protest against the planned partial-privatisation of the mail operator, which some say will undermine the service and lead to job losses.

Also see: Changes needed to sustain Royal Mail, Mandelson claims