Royal Mail chairman Allan Leighton has told a panel of MPs that a planned stamp price freeze will delay the postal service's financial recovery.

Mr Leighton told the House of Commons trade and industry select committee that the proposals would cut the Royal Mail's revenues by �460m over three years, jeopardising its plans to return to profit by 2006.

"We are trying to turn this company round in three years. It's painful and we need some certainty," Mr Leighton said.

Under the price cap plans, put forward by the postal regulator Postcomm, the price of first and second class stamps would go up by one penny from next April, and would then be frozen until 2006.

Price battle

The Royal Mail, known briefly as Consignia, is pushing for more flexible pricing rules that would allow it to respond to unforeseen costs.

It argues that it needs more control over pricing in order to compete effectively as the postal service is gradually liberalised between 2003 and 2006.

Mr Leighton told the committee that the regulator should "give us the green light for the modest price package we have been advocating for nine months, and which is essential to the financing of our renewal plan".

The Royal Mail, hit by the rise of electronic communications and threatened by private sector competition in the lucrative express deliveries market, is operating at a loss of about �1m a day.

The company is planning to get itself back on track by cutting jobs and closing 3,000 urban post offices - about a third of the total network.