A GOVERNMENT watchdog has dismissed warnings that postal deliveries to rural areas are under threat.

Ofcom said a new package of measures was designed to safeguard the universal postal service, helping to make it both financially sustainable and more efficient.

It includes a broader review of Royal Mail's ability to deliver the universal service, including a review of efficiency and parcels delivery.

Under the universal service, Royal Mail must deliver letters and parcels six days a week to every address in the UK at a uniform price.

Royal Mail and rural stakeholders - including the Rural Services Network - have warned that competitors who cherry-pick more profitable postal routes are putting postal deliveries to isolated communities at risk.

But Ofcom insists that the universal postal service is not under threat.

Royal Mail said would play its part in the Ofcom review but was disappointed that Ofcom did not share the company's view that "unfettered direct delivery" poses a threat to the universal service.

Royal Mail said it welcomed competition and operated in the most liberalised postal market in the EU. But no other EU country had the combination of significant mandated access and direct delivery.

Ofcom's review of factors affecting Royal Mail's ability to deliver the universal postal service will conclude next year. It will consider Royal Mail's efficiency and its parcel delivery performance.

Ofcom says Royal Mail's productivity is improving, but the rate of progress was flat on the previous year and below the company's own targets.

Furthermore, Ofcom says it does not believe the universal service is currently under threat from other operators collecting and delivering letters without using Royal Mail's network.

Ofcom says continued progress on efficiency is crucial if the universal postal service is to be financially sustainable in the longer term.

The watchdog says it will continue to monitor the situation and may still conduct a further review of competition near the end of 2015 if necessary.

Ofcom chief executive Ed Richards said: "Ofcom's Board has considered all the evidence in the postal market carefully over the past few months.

We have concluded that there is no present risk to the financial sustainability of the universal service.

"This conclusion is based on Royal Mail's own business plan and evidence as well as a range of other data.

"We take our duty to secure the universal service extremely seriously.

Ofcom will continue to monitor carefully any risks that may arise and, if necessary, will act accordingly."

Documents relating to Ofcom's decision can be downloaded here.