Opening up the UK postal service to competition has produced "no significant benefits" for households and small business and leaves Royal Mail facing "radical changes", according to an official review.

The independent panel set up by the UK Government also found there was a "substantial threat" to the financial stability of the Royal Mail and the universal postal service - the collection and delivery to all UK addresses.

The initial findings of the report, due to be completed by the end of the year, comes two years after Royal Mail's 350-year monopoly was brought to an end. It also comes amid the Post Office's plans to close 2500 branches in the UK; dozens across greater Glasgow and Argyll and Bute have been earmarked for closure or are already shut.

The SNP, which claims the closures would be avoidable if Holyrood controlled the postal service, has described the policy of liberalisation as "an unmitigated disaster" and warned businesses, particularly in rural Scotland, are at the mercy of Royal Mail.

The chairman of the inquiry panel, Richard Hooper, said Royal Mail and the postal industry were at a "crossroads" and there was now a "strong case" for taking action to make sure the company had a sustainable future.

He said: "As we see rapid changes in the way people communicate, the way in which the postal sector is regulated will also need to change, and we need to establish how best to create the incentives for Royal Mail to modernise its operation, providing a stable future."

The report states: "We have come to the conclusion that the status quo is not tenable. It will not deliver our shared vision for the postal sector."

According to the report the postal market is changing and faces an "uncertain future", especially as firms look to cut costs in the face of challenging economic conditions.

While it claims homes and small firms have not gained from competition, it said large companies have seen "clear benefits", including "choice, lower prices and more assurance about the quality of the mail service".

Mike Weir, Angus MP and SNP postal spokesman, who gave evidence at the review, said: "There is no satisfaction in saying I told you so, but these interim conclusions almost echo word for word the warnings we gave the review on the impact of liberalisation.

"The universal service obligation is vital for Scotland, particularly for small businesses in rural areas."

Westminster business secretary John Hutton said: "The initial findings from the review team paint a stark picture of the huge changes in the postal market. They are a wake-up call to anyone who believes it can be business as usual."

A Royal Mail spokesman said: "The report identifies the ways in which the open postal market is clearly not working and Royal Mail looks forward to submitting its further views on the changes that are required in the market."