SWEEPING changes to the way benefits and state pensions are paid will sound the death knell for post offices already struggling to survive, fear sub-postmasters.

Order books and Giro cheques will gradually be phased out from April and customers will be left with three choices - to have benefits paid into current accounts, basic bank accounts with post office access, or open a Post Office card account.

The special post office-only account would mean struggling offices kept their customers loyal.

But to get one, customers must ring a special number and insist on a Post Office card account.

They are then sent a "personal invitation" which must be taken to the post office before they can fill out forms for an account.

Ian Hughes, from Terrington Post office, said: "I think personally it's a recipe for an administrative nightmare.

"We are watching the situation and anticipating the challenge."

Helmsley sub postmaster Geoff Simpson, who reopened two weeks ago after a gang of men armed with chainsaws targeted his post office, said he was confident his customers would continue to show their support.

Mr Simpson, York branch secretary for the National Federation of Sub Postmasters, warned: "Sub-postmasters do rely very heavily on pension and benefit allowances and without the income many will close."

Ryedale MP John Greenway said: "If people are finding it difficult to the point where they believe people don't really want them to have a Post Office card account, if they complain to me I will take it up with ministers. What's absolutely crucial is that postmasters get paid for dispensing the cash at post offices, without that vital income they can't keep going."

A spokeswoman for the Department for Work and Pensions, which is implementing the changes, said: "It's the customer's right to go where they choose, and if they go to a bank that is their choice."

Updated: 12:15 Friday, February 07, 2003