Postal group Consignia is losing £1 million a day and faces "death by a thousand cuts" under plans to speed up competition, it warned today.

The industry's regulator unveiled moves to open up 30 per cent of Consignia's business from April, 60 per cent from 2004 and the entire mail market by 2006.

Postcomm said the best way to improve services and contain costs was for the company to face "real competition."

But Consignia warned that the plans threatened the universal service, which guaranteed delivery to every address in the country at the same price.

For the first time it was revealed that the organisation is losing £1 million a day and was spending 28p delivering every first-class 27p letter.

Chairman Allan Leighton said of the proposals: "Competitors can now cherry-pick the profitable parts of our business, which substantially pay for the 'one price anywhere in the country' promise of universal service.

"For Consignia the regulator's approach represents death by a thousand cuts. We want to improve our customer service levels, become a great place to work and to be profitable.

"To do this we need to be competitive. Regulation should support a competitive environment, not stifle it."

Postcomm proposed a three-stage plan that would see business mail contracts open to competition this year and full competition by 2006, much quicker than had been expected.

Postcomm chairman Graham Corbett said: "The current postal monopoly is clearly not providing its customers with the service they want and is failing to contain its costs.

"We believe the most effective way to change this is for the company to face real competition."

Consumer group Postwatch welcomed the proposals, which it said would give Consignia the incentive to "get its act together".

Billy Hayes, general secretary of the Communication Workers Union, said: "The proposals amount to the irresponsible wrecking of a public service in favour of privateers."