The era of mass post office closures is over, Business Secretary Vince Cable has promised.
Customers could become part owners of their local branch in a Co-Op style arrangement, under radical reforms set out by the Government.
Ministers also plan a dramatic expansion of products available in post offices to include a full range of banking services.
The measures are part of a radical reform of the postal service.
The Royal Mail, which currently owns Post Office Ltd, will be split off to create a business dedicated to letter and parcel delivery, and then sold under controversial privatisation plans.
While 10 per cent of shares will go to employers, the remainder could be floated in a British Gas-style privatisation or even sold to an overseas bidder.
Post Office Ltd announced the closure of 55 branches in Birmingham, Warwickshire and Solihull, including five replaced by part-time “outreach” services, in 2008.
It was then announced that another 69 services in the Black Country, Worcestershire and Herefordshire, including 13 to be replaced by outreach services, were also threatened with closure.
The closures were part of a national scheme to shut 2,500 branches. Post Office Ltd insisted changes were needed because of falling customer numbers and the increasing use of the internet to access services.
But announcing the reforms, Dr Cable pledged: “This experience in recent years of mass closures in order to get down the subsidy, that has passed.”
Handing ownership and running of post offices to employees, sub-postmasters and the local community would “empower” the people who knew the business best, he promised.
He declined to say how much money the Government hoped to raise through the sale, how much the employee shares will be worth, or how quickly the privatisation will go ahead, although it will not be before next summer.
The move will be fiercely opposed by the Communication Workers Union, which successfully fought plans by the Labour government to part-privatise the postal service last year.
The Government said the Royal Mail, which employs postal staff and owns the delivery vehicles, and the Post Office, which runs the branch network, were two “cornerstones” of British life.
The plans were aimed at securing “vibrant futures” for both, said Mr Cable, adding: “My policy is to put them on a stable footing for the future.
“Royal Mail is in a difficult position. There is no hiding the facts - mail volumes falling, a multibillion-pound pension deficit, less efficiency than its competitors and an urgent need for more capital at a time when there are huge constraints on the public purse.”
The Communication Workers Union criticised the Government’s “obsession” with privatisation and warned that customers and post offices would suffer.
General secretary Billy Hayes said: “The Government has wasted no time in flogging off the country’s state assets without exploring other options. This obsession with privatisation is deeply worrying.
“Handing postal services over to the City spivs and gamblers that Vince Cable recently denounced, but is now feeding, will be bad news for everyone.”