The consultation paper details services that the network could offer, including a current account, children's savings account and business banking.
The government also hopes it will start offering mortgages although this would be limited to larger branches, with information available at smaller post offices.
Business Secretary Peter Mandelson said: "Growing financial services at the Post Office will help secure its future and give people access to a full range of banking products at an institution they trust and value."
But Shadow Business Secretary Ken Clarke called it "a last-minute attempt to patch up the damage done after 12 years of neglect".
The National Federation of SubPostmasters welcomed the consultation but general secretary George Thomson said he was "disappointed at its timid approach".
The consultation is open until February 24, 2010. Submissions can be made at www. bis.gov.uk/postofficebanking.