Left-wing think tank Compass has put forward the idea, which it claims would help raise money to modernise without selling off any of the company.
The Government's legislation allowing the sale of a stake in Royal Mail to a private operator faces a difficult House of Commons vote next month.
Compass believes the Government should use its idea to amend the bill to avoid a protest vote by Labour backbenchers. It will probably have to rely on Tory support to get the legislation passed.
An early day motion opposing the legislation has been signed by 148 Labour MPs.
But postal affairs minister Pat McFadden today told Radio 4's 'Today' programme the Compass proposals were not under consideration.
McFadden described them as "unworkable" and said they were a "political fix" which underestimates the challenges faced by Royal Mail.
He signalled the Government's determination to stick to the plan conceived by business secretary Lord Mandelson, which will bring private investment into Royal Mail by allowing another postal operator to buy 30% of the company.
McFadden described it as the "most convincing plan that has been put forward so far".
However, there was a sign yesterday that Royal Mail's appeal to private operators is diminishing with reports that Deutsche Post has withdrawn from the tender for the stake.
Rival mail operator TNT and private equity firm CVC are expected to make bids.