The row over An Post's seven cent rise in stamp prices rumbled on yesterday with employers rejecting as "derisory" bulk discounts which the semi-state hopes will temper dissent.

Dismissing the discounts as a "sop", small business lobby ISME accused the sector's regulator, ComReg, of meekly surrendering to An Post's demand.

An Post's offer of a five cent per item discount for 500 mailed items sent before noon with a two-day delivery delay is inadequate and insulting to business, said ISME's chief executive, Mr Mark Fielding. ComReg has been too lenient towards An Post, he said, urging it to set achievement targets for management at the firm. "Otherwise, any income derived from further price increases will be quickly wasted on existing restrictive work practices and operational inefficiencies," Mr Fielding said.

His swingeing attack was dismissed by An Post, which said ISME was merely pushing for the best deal for its members.

Accusations of mismanagement have been thick in the air since An Post last week said it would raise stamp prices pending ComReg approval.

The two sides agreed a series of discounts on Thursday, after the regulator rejected an initial set of rates as inadequate. The price of a basic stamp will now rise to 48 cents from the end of the month. An Post sought the price rise, worth 18 million a year, after reporting annual losses of 70.5 million - the largest in its history - for 2002.

The semi-state said its restructuring plan was 18 months behind schedule. Despite aiming to cut 1,100 jobs by 2005 and taking a restructuring charge of 52.5 million in its 2002 results, the workforce grew by 200 last year.

Business leaders have reacted furiously. Credit card firm MBNA, which employs more than 1,000 in the Republic, warned ComReg that the inflation threatened its ability to grow and compete in the Irish market.

Several other major firms - including Eircom, NTL and TICo Group, a major bulk mail producer - proposed alternatives to the price rises, according to submissions made to ComReg.