The government has launched a review of the UK's postal service to assess the impact increased competition has had on the Royal Mail.

The organisation's monopoly came to an end at the start of 2006 when the market was opened to other operators and the group has been further damaged by recent strike action.

The body has also seen the volume of mail it delivers fall as customers use other methods such as email or text message to communicate, added business secretary John Hutton.

"We are launching a review to examine the impacts of liberalisation, trends in future market development and the likely impact of this on Royal Mail, alternative carries and consumers," he said.

The Liberal Democrat's shadow business secretary Lembit Öpik welcomed the review but challenged the government to consider splitting up the Royal Mail and the Post Office into two separate organisations to meet the demands of the new market.