In an interview with the Financial Times, he ruled out privitisation to outside shareholders but added he was "always interested" in something that "had a greater mutuality in a co-operative way" and gave the workforce "closer engagement".
However, even with government support the proposals, which are being mooted by Royal Mail chairman Allan Leighton, may come unstuck due to lack of parliamentary support.
Yesterday shadow trade and industry secretary David Willetts suggested the Conservative Party would try to block any attempt to drive the plan through parliament.
A rebellion within Labour ranks is also likely and the leadership at postal union the Communication Workers Union is against the move.
Under Leighton's proposals, the government, which owns the mail company, would lend Royal Mail 拢2bn to buy shares over a three-year programme. The money would go towards reducing a 拢2.5bn pension deficit.
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