After recording a $200 million loss, Australia Post is shifting its priorities to packages, with half a billion parcels delivered to people in the last financial year.
Postal workers were able to deliver 20 per cent more parcels during a trial of the skipped letter rounds.
But an extra delivery day will be added for letter deliveries to make up for the change.
Australia Post is prioritising packages after delivering half a billion parcels last financial year. (Joel Carrett/AAP PHOTOS)
Priority mail delivery - which makes up eight per cent of addressed letters - will also be revamped in a bid to have them delivered faster.
One postie will remain allocated to one round rather than needing to cover several routes, which is currently the case.
Australians receive an average of two addressed letters a week.
Communications Minister Michelle Rowland says Australia Post needs to adapt to the changing digital environment.
"These new processes will mean Australia Post continues to deliver the high-quality letter service many Australians rely on while also growing its booming parcel business," she said.
"Modernising Australia Post will put it on a surer footing so it can deliver the essential community services Australians need."
Finance Minister Katy Gallagher says the organisation needs to save money so it doesn't go bust.
"The fiscal sustainability of Australia Post is vital to the government's ongoing commitment to provide high-quality postal services to Australians."
Australia Post CEO Paul Graham said the reform roadmap was a crucial first step in modernising the service, making it more sustainable while still providing secure employment for tens of thousands of posties and other team members.
"The changes to the frequency of letter delivery will enable us to focus on what matters most to Australians - fast and reliable parcel delivery with better tracking technology and quicker turnaround times for eCommerce," he said in a statement.
The service would continue to prioritise and protect vulnerable people, maintaining discount stamp pricing for pensioners and charities, while offering some of the lowest stamp prices in the developed world, he said.
Australia Post's proposal to jack up stamp prices from $1.20 to $1.50 from early next year is being reviewed by the consumer watchdog.
Prices for concession card holders will remain at 60 cents and Christmas stamps will still be able to be picked up for 65 cents.
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