Hundreds of postal workers are staging a protest against the Government's plans to sell-off 30 per cent of the Royal Mail, which could leave Gordon Brown facing his biggest backbench rebellion since becoming Labour leader.

As union members prepared to converge on Westminster, a row developed over the Government’s release of a letter warning of dire consequences for Royal Mail staff – including a halving of staff pensions – if its plans failed.

Written by Jane Newell, chairman of the Royal Mail's pension trustees, to Lord Mandelson, the Business Secretary, the letter claimed that the pension fund deficit would be "significantly larger" than the previously-quoted figure of £5.9 billion if recommendations from last year’s Hooper report into the business were not implemented.

However, the Communication Workers Union (CWU) claimed today that the letter was deliberately leaked in an attempt to "scare" opponents of privatisation, which it said was likely to place a large stake of the company into the hands of a foreign company.

Billy Hayes, the CWU leader, claimed that it was a "scandal" that the chairman of Royal Mail's pensions trustees should apparently be interfering in politics.

"This is designed to scare MPs. The Government is saying they want a foreign company to run the Post Office, which is ridiculous," he said. "We could be faced with a situation where the Royal Bank of Scotland is nationalised and the Royal Mail is privatised."

Amid signs of growing dissent over the plans, with 122 Labour MPs so far signing a Commons petition opposing the Government, there were indications that the Prime Minister may be forced to rely on Conservative or Liberal Democrat votes to get the bill through Parliament on Thursday.

The petition, or Early Day Motion (EDM), was put forward by Geraldine Smith, Labour MP for Morecambe and Lunesdale, who said that the Government was "rushing through" the measure.

EDMs, although non-binding, are used by ministers as a useful tool to gauge backbench feeling on government policy.

Among prominent Labour MPs signing the motion was Peter Hain, the former Work and Pensions Secretary, who said that the "colossal" pensions deficit was far from the only issue.

"The question is, by bringing in the private sector, don’t you open the door to full-scale privatisation in the future? How would the public interest be protected with a private sector partner?" he said.

Mr Hain said the Government would have difficulties getting the plans through Parliament.

"There is big opposition among Labour MPs who don’t want part-privatisation, and there is big opposition among Tory and Liberal MPs who want full privatisation," he said. "So it’s not clear to me where the majority for this Bill will lie."

However Pat McFadden, the Postal Services Minister, argued that the Royal Mail was facing "huge problems" and defended publication of the letter as being a way to illustrate how vital the sale would be.

"We propose to take on the deficit but we cannot ask taxpayers to do that without making sure the company is modernised," the minister told Sky News. "That is why we need to bring in a partner to deliver the change the company needs.

In her letter, written on February 19, Ms Newell wrote that Royal Mail was "already balance-sheet insolvent".

If the Hooper recommendations - including part-privatisation - were not implemented, fully funding the pension scheme was unlikely, she added.

"At present, in a winding-up, the plan would not even be able to provide as much as 50 per cent of members’ benefits," she warned.

There are around 450,000 members of the pension plan with some 160,000 still working and 290,000 retired or on deferred pensions. The overwhelming majority are on final salary schemes.

In theory, the Government’s Pension Protection Fund (PPF) would act as a safety net. However, Ms Newell wrote: "I would not like to speculate on its ability to absorb the plan without putting an intolerable levy strain on remaining UK pension schemes."

She called for the Hooper plan to be implemented "for the benefit of all concerned".

Allan Leighton, the Royal Mail chairman, and Adam Crozier, its chief executive, will be asked for their views today when they give evidence to the cross-party Business and Enterprise Select Committee.

Times Recommends

• Why Witherspoon is highlighting domestic violence
• No, MP does not stand for Mostly Plastered
• Don’t bottle out of your champagne moment