A MULTI-million pound package to help struggling rural post offices in North Yorkshire and York fight off the threat of closure has cleared its final hurdle.

The European Commission has approved the cash handout to small outlets hit by moves to end over-the-counter payments of pensions and benefits.

Now the £36 million package for the Yorkshire region will pay for ambitious changes to allow customers to make cash withdrawals from their bank accounts at rural sub-post offices.

They will also be able to send parcels, renew television licences, pay bills and gain access to other Government services and information.

The three-year package will pay for the modernisation of ageing outlets and even allow sub-post offices to be set up in pubs and hairdressers'.

It was announced last December, but had been blocked by the need for "state aid" approval from Brussels, which has now been granted.

Trade Secretary Patricia Hewitt said: "This is great news for our rural post offices and the wider post office network. We can now get the money out of the door and into post offices.

"The cash will provide a vital lifeline to rural communities and help ensure our post offices deliver the best possible services to the people they serve.

"In many rural communities, the post office is also the village shop, the local community centre, the business exchange and the bank."

Dave Hope, who has been post master at Barlby Post Office for 20 years, said any financial support would be extremely welcome.

He said: "It's absolutely necessary, particularly at a post office such as ours which depends on over-the-counter transactions.

"The shop trade is not sufficient to keep the business going, so the post office money is essential. Some people say we could lose as much as 40 per cent of our business with these changes."

Paul Abbott, postmaster at Micklegate Post Office, said: "There's no doubt that rural branches will close down because of these changes despite the European support.

"Without the support of benefit payments that they get now they will not be able to continue, they will not have the turnover."

A post office is defined as "rural" if it serves a community of fewer than 10,000 people. There are 700 of them in the Yorkshire region.

The Government has been accused of threatening rural post offices with closure by encouraging the elderly to have their state pensions paid directly into bank accounts.

Since last month, pensions and benefits can be paid directly into a bank, building society or post office account, rather than over-the-counter.

Updated: 11:18 Saturday, May 31, 2003