Letter volumes have halved since 2011, regulator Ofcom said, increasing the risk that the universal postal service, which offers nationwide delivery six days a week, will become financially and operationally unsustainable.
Ofcom Chief Executive Melanie Dawes said: "Postal workers are part of the fabric of our society and are critical to communities up and down the country.
"But we're sending half as many letters as we did in 2011, and receiving many more parcels. The universal service hasn't changed since then, it's getting out of date and will become unsustainable if we don't take action."
She said Ofcom was setting out options for reform so there can be a national discussion about the future of universal post.
Royal Mail said in a separate statement that the report showed that reform was urgently needed to protect the future of the one-price-goes-anywhere universal service.
"We are doing everything in our power to transform, but it is not sustainable to maintain a network built for 20 billion letters when we are now only delivering seven billion," Chief Executive Martin Seidenberg said.
(Reporting by Paul Sandle; editing by Sarah Young)
