A privatised Royal Mail is off the agenda, sources close to business secretary Lord Mandelson have said.
The comments come ahead of a report on the Royal Mail expected this week which will set out plans to modernise the service.
But early warnings of privatisation - sparked by comments made by Lord Mandelson before he became business secretary - appear to have been inaccurate.
"Our concern is to save the Royal Mail and secure its future, not privatise it," a government source told Sky News.
"We have a manifesto commitment to a publicly-owned Royal Mail and we will not be setting that aside."
This week's report - by Richard Hooper, former deputy chairman of media watchdog Ofcom - is expected to say a universal service should be maintained an letter delivered six days a week across the country.
But it is also likely to raise concerns about Royal Mail's pensions deficit, which is likely to have doubled from its £3.4 billion level in 2006.
The report comes as the Communication Workers Union presses ahead with a strike this Friday in mostly north-western post offices, threatening the Christmas mail.
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