•Lack of bids means unpopular plan will be postponed •Cameron: government has "completely bottled it"

Lord Mandelson has admitted that the proposed part-privatisation of Royal Mail will be delayed after the government received only one bid.

In an interview with the Financial Times, the Business Secretary said the plan was being “jostled” by other bills for the remaining legislative days in the current parliamentary session.

The government has been looking to sell a 30 per cent stake to the private sector but has been disappointed by the muted response so far.

A motion opposing part-privatisation has been signed by 148 Labour MPs and ministers are desperate to avoid another backbench rebellion after Gordon Brown suffered his first Commons defeat over Gurkha settlement rights.

Mandelson, who has been piloting the postal services bill through Parliament, admitted that it was increasingly unlikely that the legislation would be passed before the summer recess.

He said: “I want to retain the slot, but... I have to concede that the original linking of the legislative passage and the bidding process for the strategic partner has been decoupled by the depressed state of the postal markets and individual businesses’ share prices.”

But speaking earlier today, Mandelson said the government remained committed to completing part-privatisation before the next election.

"The reason we want to do that is to sustain the high quality letter delivery service that we depend on in this country, therefore we remain committed to making these changes," he told BBC News.

At his press conference this morning, David Cameron said the government had "completely bottled it". He added that he would be happy to give up opposition time in parliament to pass the reform bill.

Centre-left figures such as Peter Hain, who recently returned to government as Welsh Secretary, are keen to re-examine a proposal to turn Royal Mail into a not-for-profit company.

The proposal, outlined by the left-wing campaign group Compass, would see Royal Mail become a non-profit company like Network Rail or the BBC Trust.

Ministers previously rejected this option as “unworkable” and a “political fix”. But the plan, which would allow private sector involvement but avoid a divisive sale, may now be reconsidered.

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