The first steps towards the privatisation of Royal Mail will be unveiled this week as ministers prepare to remove the biggest obstacle to its break-up.

Lord Mandelson, the business secretary, is expected to announce that the government is ready to take on the organisation’s ailing pension fund, paving the way for radical reforms to the postal service.

The fund’s deficit is thought to have ballooned to more than £7 billion, double the figure quoted in Royal Mail’s last set of reports and accounts, creating a massive liability for taxpayers.

Ministers believe that Royal Mail’s pension crisis is blocking improvements in the way letters and parcels are sorted and delivered and threatening its survival. They have concluded that there will be no improvement to deliveries while the organisation carries this burden.

Times Archive, 1929: The Post Office from within

The Post Office cannot prosper until it is set free from a form of control which is fatally inappropriate to a commercial organisation

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By taking responsibility for the £22 billion pension scheme — one of the largest in Britain — the government will make Royal Mail a far more attractive prospect to possible buyers of the business. It will give Royal Mail greater commercial freedom and enable it to open talks with continental rivals.

Successful foreign mail companies could possibly take charge of the sorting and delivery operations or the post office network.

The break-up would cause a political furore. Unions say it would lead to further huge job losses and Labour backbenchers fear that the government may be reneging on an election pledge not to privatise Royal Mail.

Last night a source close to Mandelson said: “Our concern is to save the Royal Mail, not to privatise it. We have a manifesto commitment to a publicly owned Royal Mail and we will not be setting that aside.”

However, the wording of the pledge would not prevent partial privatisation, a move Mandelson has already hinted that he favours.

A long-awaited report into the future of Royal Mail will be published this week. The Hooper review is expected to accuse it of providing a deeply substandard service.

It will conclude that leaving Royal Mail to continue operating as it does is “not tenable”.

Alan Duncan, the shadow business secretary, said: “I fear the government is going to steal £22 billion of pension assets, dump the liability as a mortgage on future generations and dress it up as the salvation of the Royal Mail.

“It is an accounting fraud of the most stinking sort and the public need to be alert to the trick they may be about to play.”

Hooper’s report is likely to inflame postal workers in the run-up to Christmas. Workers at several sorting officers are preparing to strike on Friday over the threatened closure of their depots, delaying the deliveries of cards and presents.

A spokeswoman for the Communication Workers Union said: “The British public is fed up with privatisation and has seen the failures of the free market. ”

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