THE POST Office has a new swagger in its step since its last set of financial results and its latest target is capturing a five per cent stake of BT's residential telephony market.

Yesterday the Post Office launched its new HomePhone service to take advantage of anti-monopoly legislation which is forcing BT to open up its services to wider competition.

The government's wholesale line rental (WLR) initiative means BT must allow telecoms providers access to its residential lines.

On this basis the HomePhone service aims to'own' the whole customer relationship for at at least one million homes by 2008, delivering a single bill for both calls and line rental.

The Post Office said more than 21million households have yet to switch from BT, including 1.2 million in Wales, despite increased competition in the market, and it is these potential customers it is targeting.

Chief executive David Mills said: "With a combination of line rental and cheaper calls on a single bill we can provide a comprehensive, money-saving service to residential users.

"Consumer demand is there and our credibility as a trusted supplier is unchallenged.

"The consumer stands to make excellent savings and the Post Office stands to develop an important new service into a significant new business stream."

Post Office bosses believe that many consumers have stayed with BT because they either don't know or don't trust the alternative suppliers. They also think complicated charging structures and dual bills for calls and line rental make it very difficult to see what they will actually save.

They claim that HomePhone's tariff and charging structure will make it the most transparent service on the market. Users will keep the same telephone, the same number and the same line, and will not need to dial a prefix number or install additional equipment.

The Post Office said its service will offer average savings of 12 per cent against BT's Together Option 1 tariff, with some households able to save as much as 20 per cent.