The Government has thrown a lifeline to dozens of West Midlands post offices by announcing they will continue to pay benefits and pensions.
Ministers scrapped plans to hand responsibility for Post Office Card Accounts, basic bank-style accounts used by 4.3 million people, to a private contractor.
It followed a campaign led by MPs who were convinced losing the accounts could lead to the closure of 3,000 post offices countrywide.
This would be an even greater cull of branches than the one already under way, which involves the closure of 2,500 branches, including 123 in the West Midlands.
Post Office Card Accounts are used by people who do not have bank accounts to collect benefits, and keep many struggling post offices afloat by bringing customers onto the premises.
But the Government had put the contract to run the account out to tender, and it was widely believed that Ministers intended to hand it to Pay Point, a business which operates a network of payment machines in newsagents and petrol stations.
However, Work and Pensions Secretary James Purnell told the House of Commons he had decided instead to scrap the tender process and simply allow Post Office Ltd to continue running the account.
It followed a campaign by MPs from all parties, including Labour MPs who feared they were being blamed for cuts in the post office network.
The Government has supported Post Office Ltd’s current closure programme by helping pay for compensation for sub-postmasters whose branches are closed.
Opposition MPs have accused Labour politicians of supporting closures by refusing to back a Conservative motion condemning the Government’s policy.
Speaking in the House of Commons, Mr Purnell said: “The Post Office is a cherished national institution at the heart of many communities. The card account is an important source of income, and brings customers through the doors of post offices.
“Global economic events have made people, particularly the most vulnerable in our society, more concerned about financial transactions. The Post Office is a trusted brand, and is seen as a safe, secure and reliable provider of services in these turbulent times.
“Now is not the time for the Government to do anything to put the network at risk, particularly as post offices are often the only providers of financial services in remote areas.”
Birmingham MP Lynne Jones (Lab Selly Oak), welcomed the announcement, but asked Mr Purnell to look for ways of expanding Post Office services to ensure branches had a secure future.
Mr Purnell said: “I will give her an assurance that we are going to expand the range of financial and other services that are available.”