THE future of vital post offices could be threatened by a "lack of imagination" from Labour ministers, a damning report warns today.

A cross-party committee of MPs condemns the "inadequate" response from Government departments to its inquiry into how to attract more customers to branches.

Business Secretary Lord Mandelson called for the MPs to investigate how to reverse the decline of the network.

But his ministerial colleagues did not rise to the challenge, sparking fears that more services will be funnelled on to the Internet at the expense of face-to-face contact in branches.

The review was ordered in the wake of the controversial cost-saving closure programme, which last year saw around 140 branches closed in the Westcountry.

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In today's report, the Business and Enterprise select committee says it is "easy" to draw up a list of services which could be made available through post offices in the future, including paying of fines, taking delivery of online shopping and offering banking services.

But it is "bizarre" that Government policy recognises the value of the network while individual departments "do not see that they have a role in making sure that everybody, not just the web-enabled, has access to their services".

Committee chairman Peter Luff said there is "no reason" why the network cannot "flourish" in the future – provide there is "political will". He said the Government has "underestimated the potential of the network to serve as a link between government and its citizens".

"Although some departments are seizing the opportunity a truly national network offers to allow easy access to their services, many departments are woefully unimaginative about the needs of their customers.

"The network has declined over the last decades because government business has transferred to cheaper channels.

"The Post Office has been used to provide public services and private services in partnership for nearly four centuries; the committee has no doubt that with will and imagination, and whole-hearted government support, it can continue to do so."

Mr Luff added that it was "absurd" for the Government's £150 million-a-year subsidy for the network to continue to offer limited services, "when it could simply pay the network to offer services people actually want".

During the course of the inquiry, the committee visited Devon to hear how the county was supporting the network of post offices which survived last year's closures.

In the report, the committee said it was "particularly impressed" by the efforts made by Devon County Council to "improve the underlying businesses associated with sub-post offices" by offering grants of several thousand pounds to stop businesses going under. "Helping businesses in this way not only supports the network, but safeguards other facilities for the local community" the report said.

Last night business minister Pat McFadden hit back at the suggestion that the Government is itself in part to blame for the demise of the post office.

"In the face of change in society and the growth of the Internet, it cannot survive on nostalgia so it has to seek new ways of bringing custom through the door," he said.

"Part of that can be through Government work and we have already awarded the Post Office the new card account contract for benefits and pensions, as well as the new contract for driving licence renewal. But part of it can be an expansion in banking and financial services too."