The planned investment over the next three years will include £198m to maintain salaries, and £227m to improve existing services.
A £25m flexible fund' will be set up to support modernisation and new practice pilots such as mobile and satellite POs and the co-location of POs with pubs and hairdressers.
But RSA associate director Mike Goodman said the subsidy would only slow down the rate of closures. "It won't improve the trading position. Once the subsidy stops, closures will rocket."
Rural post offices will lose footfall and commission from April 2003 when individual state benefits start being paid directly into banks.