Direct marketing firms have started a campaign against any further price increases for An Post.

The telecoms and postal regulator, ComReg, is currently considering an application from An Post to have the price of a stamp increased from 48 cent to 60 cent, a 25 per cent rise.

The Irish Direct Marketing Association (IDMA) said An Post was "financially viable" and did not need the increase.

ComReg has been studying the price application for several months now, but has so far refused to sanction the price rise.

The regulator remains unhappy about An Post's delivery performance and also wants an improvement in mail volumes. It claims these are far lower than in similar sized states to the Republic.

However last night a spokesman for An Post said there had not been any increase between 1991 and 2002 and An Post clearly needed the revenue. He said the company was implementing a major cost-cutting plan and getting a price rise was related to this.

The IDMA said the price application was tabled even though An Post's performance on next day delivery remained poor at just 73 per cent. It said this rate left the Republic languishing behind all other 24 EU states.

"A rise will endanger An Post's own commercial future as well as that of Irish industry. It will lead to loss of volume and therefore a loss of income. The result is a terminal spiral in which postal rates are huge and increasing, while mail volumes are tiny and decreasing. This will enforce cuts in services and a retreat from the commitment to collection and delivery five days a week from all points in Ireland," said an IDMA statement.

About 80 per cent of all mail posted in the Republic is business mail and direct marketers are among the largest users of the system.

Since 2003 bulk mailers have been able to benefit from discounts, but the latest price application could still impose significant extra costs.

The IDMA said An Post should focus instead on loss making contracts it had with foreign postal operators which it said cost the company €20 million a year.

"Alternatively An Post should remove their current discriminatory pricing policy and offer Irish customers the same terms and conditions as they offer foreign postal operators," said their statement.

The agreements with foreign postal operators are based on a Europe-wide agreement known as Reims.