The Royal Mail was today under increasing pressure to deliver the goods - after it emerged that a record £50m compensation was being paid out for mail arriving late.

New figures revealed that the organisation missed all of its targets in the first quarter of the financial year, with millions having to be awarded to irate business and individual customers.

The compensation followed disruption to the service last year when deliveries were hit by industrial action.

The firm insisted that reliability was improving and said more than nine out of ten first class letters were arriving the day after being posted.

But the new statistics showed that just 88.3 per cent of first class letters were delivered on time between April and June against a target of 92.5 per cent.

Union bosses in the North-East hailed the improvements made since the start of the year, when the new single daily delivery system caused chaos.

Last month, Sunderland was the country's second highest-performing area, with 96 per cent of first-class letters delivered the following day. Darlington ranked highly with 93.5 per cent, as did Newcastle, with 93.1 per cent.

However, Teesside was branded a "deteriorating" area by the Postwatch watchdog. Union officials said targets for the area were unrealistic.

The Communication Workers' Union stressed that, despite some improvements, the Royal Mail was a long way off regaining public confidence in the region.

CWU North-East secretary Paul Clays said: "If you concentrate on finances and saving money, you'll never hit your quality targets.

"In the business we're in, it should be quality first and the finances will follow. They're still a long way off getting things right."

Mail deliveries in the region suffered disastrously earlier this year, as the single daily delivery - introduced in a multi-million pound cost-cutting exercise - came into effect.

Darlington was particularly badly hit, with postmen and women working late into the evening - and even on Sundays - to clear massive backlogs of mail.

CWU Darlington branch secretary Phil Graham said that situation had improved. But he added: "Slow progress is being made towards resolving the issue, but the feeling is that it's not happening quickly enough."

Adam Crozier, chief executive of the Royal Mail, who took personal day-to-day control of the letters business in May, said there was "real evidence" that the service was getting better.

"Clearly there were some problems in the spring but the service has improved, month-on-month, since May and we are now approaching our target level for first-class mail," he said.