The Government is to press ahead with controversial privatisation plans for the Royal Mail after a report it commissioned warned that "urgent action" was needed to protect the service.

An updated version of a study originally ordered by the Labour government called for private investment, which will revive huge controversy over ownership of the group.

Richard Hooper, a former deputy chairman of Ofcom, the communications regulator, said the Royal Mail's financial position had worsened since his earlier report and the group's £10 billion pension deficit was more unsustainable.

He called for an injection of private capital into the business, arguing that it would fund increased modernisation of the postal service.