Royal Mail is set to be allowed to ditch Saturday deliveries for second class letters under plans being put forward by Ofcom that will also see wider postal delivery targets cut.

The regulator said that after a consultation, it had provisionally concluded that reducing the second class letter service to alternate weekdays, while keeping first class deliveries six days a week, would continue to meet postal users’ needs.

This would save Royal Mail between £250 million and £425 million a year, according to Ofcom.

The planned changes to the universal postal service come as Royal Mail is being sold to Czech billionaire Daniel Kretinsky for £3.6 billion, with the deal being cleared by the Government at the end of last year.

Mr Kretinsky has pledged to stick to the Universal Service Obligation (USO) after the takeover.

Ofcom also outlined plans to cut Royal Mail’s main delivery targets, for first class mail from 93% to 90% delivered the next day, and for second class mail from 98.5% to 95% delivered within three days.

This will bring them more in line with other international and European markets, it added.

But it also follows recent hefty fines against Royal Mail for poor performance, with the group hit with more than £16 million in penalties in the past 18 months for failing to meet targets.

Natalie Black, Ofcom’s group director for networks and communications, said: “The world has changed – we’re sending a third of the letters we were 20 years ago.

“We need to reform the postal service to protect its future and ensure it delivers for the whole of the UK.

“But we’re safeguarding what matters most to people – first class mail six days a week at the same price throughout the UK, and a price cap on second class stamps.”

Ofcom said its latest research revealed most people do not need letter delivery six days a week, with the number delivered each year having slumped from 20 billion two decades ago to around 6.6 billion now and set to drop further to 4 billion in the next few years.

Ofcom is to consult further on its proposals until April 10, with a final decision to be made in the summer.

Emma Gilthorpe, chief executive of Royal Mail, said: “As Ofcom’s analysis shows, it is no longer financially sustainable to maintain a network built for 20 billion letters when we are now only delivering 6.7 billion.

“Reform is crucial to support a modern, sustainable, and reliable postal service for our customers, our company and our people.”

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Number 10 has said that a “reliable and affordable universal postal service is crucial to the UK”.

Asked what the Prime Minister thought of plans, a Downing Street spokesman said: “I would remind you that this is the start of a 10-week consultation, it would be wrong to pre-empt its conclusion.

“But we’re clear that a reliable and affordable universal postal service is crucial to the UK. It must work for customers, workers and businesses that help drive growth across the country.

“Parliament has given Ofcom a duty to seek a financially sustainable and efficient universal service obligation, and the priority here must be to ensure that Royal Mail is able to effectively serve its customers in the years to come.”

The Communication Workers Union (CWU) warned the overhaul must come with better working conditions for Royal Mail staff and service improvements.

Dave Ward, general secretary of the CWU, said: “The trials that we have agreed with Royal Mail are strictly conditional on the basis that we see a significant improvement in service reliability for customers, as well as terms and conditions for postal workers being improved.

“Any failure to abide by these conditions will see our support withdrawn.”

The Post Office criticised the plans to cut back the universal postal service.

A Post Office spokesman said: “Our postmasters and customers, particularly those who are vulnerable, do not want to see a reduction in the Universal Service Obligation.”

Harriett Baldwin, shadow business and trade minister, added: “Any new agreement that will impact postal deliveries must be made with consumers in mind.”

The Royal Mail’s USO stipulates that it must deliver letters six days a week to all 32 million addresses in the UK for the price of a stamp – a requirement stipulated by law under the Postal Services Act 2011.

When Ofcom first said it was considering cutting postal delivery days, it sparked an outcry, with ministers quick to dismiss any suggestion that the Government would sanction the scrapping of Saturday deliveries.

But the current plans being looked at would not need a change in legislation, given Royal Mail would still be delivering first class post six days a week.

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