STUNNED postal workers are likely to be told today that Consignia is to slash 40,000 jobs over the next three years, it was reported last night.

One fifth of the workforce is to be made redundant and up to 3,000 urban post offices are set to be closed, according to the BBC.

Consignia's name will be changed back to the Royal Mail, the report said.

The changes are thought be part of a restructuring programme to end huge losses and fend off competition.

Last night, Cabinet minister John Reid told BBC Radio 4's Westminster Hour: "The appropriate minister will make any statement at the appropriate time."

Earlier, newspaper reports had suggested the company, formerly known as the Post Office, would slash 11,000 jobs.

Consignia chairman Allan Leighton is expected to unveil the long-awaited restructuring of the business today, which he has already said could see 30,000 jobs lost.

Consignia, which operates Royal Mail, Parcel Force and the post office network, is likely to offer voluntary redundancies.

Mr Leighton is also expected to announce that the company's name will change.

The jobs axe will fall hardest on Parcel Force, which has been operating at a loss for ten years, according to the Sunday Telegraph. About half of its 12,000 employees will lose their jobs with the result of several depot closures, the newspaper reported.

Jobs will also go in administration and central management of the Post Office, while cuts are also expected at a later stage in Royal Mail.

The Sunday Times reported that the redundancy package is worth £400m in total.

Consignia has said it expects to save £1.2bn from the cuts, which it hopes will make it more competitive as PostComm proposes to open up the business post market to competition. The postal watchdog intends to open up the market for bulk mail from next month at a level which it says represents one-third of Consignia's market by value. A further third of the market would be opened up in spring 2004 with the entire market open to competition by 2006.

Consignia has argued that the proposals will mean an end to the current universal price for first and second class stamps.

Earlier, a spokeswoman for Consignia confirmed the company would be making restructuring announcements "shortly".

She added that it would be "utterly inappropriate" to discuss any details before talks with staff had taken place.

"Consignia is losing money at the rate of £1.5m every day. The current business model will not sustain the level of costs we are incurring and this is putting the future of our services at risk."

At a minimum, Consignia needed to reduce its current costs by 15 per cent or £1.2 bn, she said.

"We expect to make initial restructuring announcements about parts of Consignia very shortly," she said.

"But our absolute priority will be to talk to our employees first, particularly if jobs are affected."

The company had "no option" but to make radical changes in order to restore profitability and improve cash flow and services.