New talks between Royal Mail and the postal workers' union are taking place this morning in a bid to prevent further strikes.

Up to 120,000 workers are set to take part in three days of walkouts from Thursday unless progress is made in the talks.

Two days of strikes last week over working practices have already led to a backlog of around 30 million items of mail.

The general secretary of the Communication Workers Union, Billy Hayes, said that he was confident of making progress if Royal Mail was "genuinely seeking agreement".

He said: "It's going to be difficult. We are not just going to attend talks and hear a reiteration of the position. We need to have serious dialogue on taking this issue forward."

The chief executive of Royal Mail, Adam Crozier, said he hoped "common sense" would prevail when CWU leaders meet bosses for talks organised by the Trades Union Congress.

He emphasised that the dispute was not over pay or job cuts but over the modernisation of the postal service. He said the union had accepted that increased efficiency would lead to more job cuts.

"We need to get through a lot more change to deal with what is happening in the market place," he said.

"There will be fewer jobs as we become more efficient and because of fewer volumes of mail."

Research by the London Charter of Commerce found that the industrial action by postal workers had cost business in the capital more than £500m since the start of the summer.

Chief executive Colin Stanbridge said: "This is a colossal amount of money for the London economy to lose and will delay the capital's economic recovery.

"Not being able to rely on a normal postal service forces companies to pay extra for couriers, delays consumer spending, damages client relationships and plays havoc with a firm's cash flow.

"It is now high time that Lord Mandelson intervened personally to broker a deal between Royal Mail and the CWU and bring an immediate end to these strikes."

The government has so far refused to intervene in the dispute, arguing that an industrial not a political solution is needed.