ROYAL Mail bosses have said postal deliveries in the North-East are almost back on track after weeks of staff struggling to cope with a new system.

The assurance came as the Government insisted yesterday the service would not be privatised following national newspaper reports of its possible sale.

The report suggested that some of the City's biggest investment banks had approached the Government in a bid to take the company private in the next year to 18 months and earn the Treasury billions of pounds.

It said that a sizeable minority of shares in the group would be offered to the company's 160,000 employees. But a spokesman for the Department of Trade and Industry said: ''We haven't got any plans to privatise it.''

Royal Mail is more than half-way through a three-year restructuring plan that has seen it overhaul the way it sorts, delivers and transports mail.

Agency workers were drafted in to several sorting offices in the region after a cost-cutting scheme to combine first and second-class posts was introduced.

Postmen and women were having to work double their normal shifts to get mail delivered and businesses and residents complained about post arriving late.

Services in Darlington were hit particularly hard, with some mail being delivered on Sundays to clear backlogs from the previous day.

The town's sorting office reported many workers going off sick with stress.

But an investigation carried out by The Northern Echo last week suggests that first-class post, at least, is arriving in the town the day after it is posted.

The Echo sent ten letters from Teesside and all but one arrived the next day at addresses in Darlington.

Royal Mail spokesman Graham Moore said: "Our target is to deliver first-class mail the day after posting and in urban areas the aim is to get it to people before lunchtime. In Darlington, in the second week after the single delivery was introduced, there was an unusually high level of sickness absence. They did have a bit of a backlog, but it is nowhere near as bad as it was.

"We are not pretending we have got all the teething problems ironed out. But managers and staff are working flat out across the region to deal with any problems."

Tom Clark, the Communication Workers' Union area delivery representative for Darlington and Durham, said the situation was better for workers and customers.

"I think that they don't have any agency workers in there at this time and the service is improving," he said. "It's not 100 per cent back to what it was, but it is getting there."

The union will meet with Royal Mail bosses next month to discuss the single delivery service and its effect on workers.

The head of the Royal Mail said on Friday that reports of problems within the organisation were "exaggerated".

Chief executive Adam Crozier said the switch to single deliveries of post was working well in the majority of the country.

He said that a Channel 4 programme on Thursday claiming to show fraud and theft among postal workers was not a fair reflection of the organisation.