Pressure on the government over the future of the Post Office Card Account (POCA) intensified this week after council leaders said post offices should keep the contract.

In a letter to Lord Mandelson, council leaders said that post office closures would “rip the heart out of local areas across the country” and deny vulnerable people access to services.

“Councils up and down the country are deeply concerned about the prospect of widespread post office closures if Royal Mail loses the POCA contract,” the letter from the Local Government Association and London Councils said.

Councils have vowed to campaign ‘in force’ to ensure that much-needed post offices remain open if the government decides not to award the POCA to Royal Mail.

A select committee of MPs criticised the delay in making a decision, calling it “destabilising” for retailers.

Its report said: “We are naturally concerned about the effects of the possible loss of the contract on Post Office Ltd, and, indirectly, on the taxpayer who may end up having to pay an increased subsidy to maintain a national network of post offices, while simultaneously supporting commercial providers of the DWP card account.”

The communications union CWU also added its voice to the chorus of support.

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