Australia Post will no longer provide daily letter delivery services as the corporation seeks to stem losses from the service. 

As part of its modernisation reforms, packages will be given priority over more traditional postal mail. 

New delivery standards have been set by the government will still require parcels and priority mail to be delivered every day.  Other mail will be sent every second day. 

Australia Post, which is entirely government controlled and privately funded, says the average Australian household now receives just two addressed letters each week, and the rules have become burdensome. 

Image: Australia Post. 

It comes as the business posted a $200 million loss last financial year, its first year recording a loss since 2015, with growing losses forecast in the future. 

Australia Post CEO Paul Graham said the changes would enable their business to focus on parcel delivery. 

"The changes to the frequency of letter delivery will enable us to focus on what matters most to Australians — fast and reliable parcel delivery with better tracking technology and quicker turnaround times for eCommerce," Mr Graham said. 

In a statement, Communications Minister Michelle Rowaldn said that Letter volumes have reduced by two thirds since their peak in 2008, while parcel volumes have boomed. 

Image: Australia Post. 

“The Albanese Government will undertake reforms to enable Australia Post to boost productivity, increase its focus on parcels, and improve long-term financial sustainability” Minister Rowland said. 

The Government also said the current geographic classification for Australia Post retail outlets will also be updated to reflect the modern Australian Statistical Standards Geography Standard Remoteness Areas, rather than the 1991 Census currently used.

This is expected to have the net effect of reclassifying approximately 70 outlets to Remoteness Areas other than ‘Major Cities’.  

“This will not impact the services provided at these outlets or the prescribed minimum numbers of post offices that Australia Post must retain, including in regional Australia” said Minister Rowland. 

The union representing postal workers said the changes were "good news all around". 

"It allows more product to be delivered in the time available, eliminates local backlogs and has created a smarter and safer way to work – reducing fatigue amongst our posties," Communication Workers Union president Shane Murphy said. 

The changes will be rolled out over the next 12 months. 

In a separate process, The Australian Competition and Consumer Commission is currently assessing Australia Post's plan to increase the basic postage rate from $1.20 to $1.50 early next year.