Australia Post hopes its $51.4 million lifeline for struggling small post offices and agents will help sustain postal services in rural and remote areas.
Chief executive and managing director Ahmed Fahour said the money would be delivered by increasing annual payments to almost 1000 small post offices across the country.
Parcel-handling rates will also be raised to better reflect the cost of delivering the service.
"We've been working closely with our licensees to identify how to best support them in the face of digitisation, a significant challenge facing our traditional letters business," Mr Fahour said in a statement.
"The new small Post Office support plan will immediately strengthen the future sustainability of 478 LPOs (local post offices) and 495 CPAs (community postal agencies) across rural and remote Australia."
The announcement followed an independent review which examined the cost of running these services, and how the revenue compared to expenditure.
The $51.4 million boost will be delivered from July 1, but the long-term future of the scheme depends on postage rates rising to $1 for a standard letter.
Australia Post also announced in March it would introduce a two-speed mail service that will slow the delivery of regular letters.
Mr Fahour said the rise of the internet had made the existing Australia Post regulations outdated, as letter volumes dropped rapidly.
Without reform, the letter delivery business would lose $1 billon each year, Mr Fahour said.
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