WH Smith post offices in 70 stores

The agreement with the Post Office follows a successful trial run involving franchises at six WH Smith sites. WH Smith also said its trading recovery was on track after profits rose 7% to £59 million in the six months to the end of February.

The retailer has reduced its reliance on entertainment products, such as DVDs and CDs, while focusing on books and core stationery products.

WH Smith said the changes, coupled with competitive trading conditions, meant like-for-like sales fell 6%, but this was offset by £8 million of cost savings. The retailer described the partnership with the Post Office as a natural fit and said there had been no negative impact on its performance at the trial stores.

It added: "Customers quickly saw the benefits of the move to WH Smith, including the convenient location in the heart of the town's shopping area, the modern and inviting Post Office environment, shorter queues, improved service and additional services, such as longer opening hours."

Post Office managing director Alan Cook said the combination made "perfect sense" for customers because there were natural links between the products both organisations sold.

He said: "Crucially, this partnership is about keeping major Post Office branches open in our towns and cities and avoiding the need for closures."

The Post Office also announced that it was looking for a retail partner for a further 15 offices. but would continue to run 373 Crown offices itself.

WH Smith said the agreement had secured the future of post office services in the 70 towns. The roll-out is scheduled for completion in autumn 2008.

But the Communication Workers Union attacked the announcement, warning that more than 1,000 experienced staff faced losing their jobs. General Secretary Billy Hayes said: "This is moving from trusted public servants to a company which regards postal services as a sideshow."