The Post Office will allow drivers to renew photo driving licences at special counters which will take driver’s pictures and signatures

The counters will be installed at up to 750 post offices from next spring, and will also scan the driver’s renewal form. The data will then be transferred electronically to the Driver and Vehicle Licensing Agency, which will send the driver a renewed licence if approved.

The Post Office said that Cogent has won the contract to supply and install the new equipment required.

The five year deal was welcomed by business secretary Lord Mandelson, who said it should look for further contracts under which it would act as government’s “front office”.

“Today’s announcement will enable a large number of post offices to act as a one stop shop for drivers to renew photographs on their licences,” he said.

“The Post Office’s trusted brand, unrivalled network, experienced staff and the new technology being purchased for the contract put the company in an excellent position to bid for other work. It can turn itself into a real front office for government.”

Lord Mandelson is leading the government’s attempt to sell a proportion of the Royal Mail’s delivery service to the private sector, although he has said that the post office network will remain entirely in public ownership.

Post offices already provide ‘check and send’ services for applications for driving licences, passports and European health insurance cards. However, this arrangement sees post offices collecting data on behalf of a government agency, rather than checking it is in the correct format before passing it on.

“We will be the first post office in the world to use groundbreaking technology for document and identity verification technology in this way, and it puts us in a strong place to use the trusted Post Office brand, our unrivalled network and our experienced staff to bid for other major government contracts,” said Alan Cook, the Post Office’s managing director.

“We are putting a huge effort into equipping Post Office branches with a high technology capability to handle transactions where strong proof of identity is needed,” he added.