Subpostmasters have warned that government plans to hand the running of the Post Office to local stores will be "a disaster" if the future of the network is not properly secured first.

In the Postal Services Bill, Business Secretary Vince Cable announced plans to mutualise the Post Office network, with subpostmasters, staff and communities all having a say in how the network is run.

He expects this to take place before the end of Parliament in 2015, however there will be a public consultation before the plan goes ahead.

Although welcoming the idea of mutualisation, National Federation of Subpostmasters general secretary George Thomson stressed the need for proper safeguarding, claiming that it would fail unless it was "backed by solid action to get the network back on its feet".

Thomson called for a minimum 10-year contract that would allow post offices to continue to offer Royal Mail services as they make up one-third of Post Office Ltd's income and one-third of a subpostmaster's income. He also urged the government to extend the number of state services it could offer a move that would "transform the network from a struggling, loss-making company into a profitable one".

The Rural Shops Alliance also called on the government to offer more services through the network before handing the reins over to subpostmasters. "The key question to be asked of government is what services the Post Office can supply to deliver sufficient income to maintain the network," said chief executive Ken Parsons. "Until it can answer that, the form of organisation adopted is irrelevant."

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