Minister for the Environment Denis Naughten has defended the decision to remove the cap on the cost of postage stamps.
Mr Naughten said he made the decision after negotiations with An Post, which he said is in a very difficult financial state.
The Minister said he faced reducing five-day postal services across the country or cuts to the network itself.
Mr Naughten said an independent firm of consultants will now carry out a “root and branch overhaul” of An Post services.
The Minister said he will draft legislation to allow for changes to be made to the Communications Regulation Act to remove the price cap and ensure An Post will analyse the impact it will have on customers and businesses.
If allowed, an increase will be the third in the price of postage stamps in the past two years.
The change to stamp prices will mean the Communications Regulator being asked to lift the postal cap from its present level.
A standard stamp to Ireland and the EU currently costs 72 cent. This is at least 20 cent lower than the price in many EU countries.
The move to bring in “significant price increases” comes after An Post has said it is necessary to counter falling volumes of mail as well as rising staff costs. among its almost 10,000 employees.
Until now the State company has been in a position to subsidise the loss from other income but is no longer able to do so, it is understood.
The general secretary of the Irish Postmasters’ Union warned that increasing the price of stamps will reduce the volume of business and threaten the postal service.
Ned O’Hara maintains that the postal service is under threat. “The network is in grave danger that it will disappear.
“We are a key resource for urban and rural communities. We want to do more for communities,” he said on RTÉ’s Today with Sean O’Rourke show.
“We need some action. The problems have been well aired. We can provide a wide range of services, we can be one-stop-shops for communities, information hubs. We can do motor tax, we’ve been saying that for years.”
Mr O’Hara said the Postmasters’ Union is “up for the challenge”.
“We’ve said we can provide numerous services, we just need to be allowed to do them.”
The Programme for Government commits to the retention and expansion of services at post offices.