The Government is considering transforming the Post Office into a full-service bank, as part of plans to rejuvenate the brand.

The Department for Business Enterprise and Regulatory Reform (BERR), led by Business Secretary Lord Mandelson, has recommended that the 12,000 Post Office branches extend the provision of financial services.

The so-called ‘People's Bank' would offer the array of financial services usually associated with an inner-city bank, including debit-card facilities, business services and current accounts.

The Post Office currently offers credit cards, personal loans and mortgages through a joint-venture with the Bank of Ireland. BERR did not confirm whether the new financial products would be backed by the UK Government.