MPs have welcomed a decision that has saved scores of post offices in and around Bristol.

The Government has announced it is awarding the Post Office the contract to continue with a card account used by millions of people to receive benefits and pensions.

Prime Minister Gordon Brown said it lifted the threat of closure at as many as 3,000 branches across the country.

The Evening Post revealed the risk of a new wave of post office shutdowns in May.

If the Post Office Card Account contract had gone to a rival bidder such as PayPoint, up to 60 branches in the Bristol area could have closed.

The National Federation of Sub-Postmasters claimed as many as 5,000 more post offices might have been axed.

The cuts would have been on top of the 2,500 post office closures confirmed in May – 29 of them in Bristol, South Gloucestershire, North Somerset and Bath and North East Somerset (Banes).

On Thursday, Work and Pensions Secretary James Purnell told MPs that the Post Office would retain the business under a new contract running for five years from 2010, with the possibility of an extension beyond that.

Mr Purnell said that in order to support a viable post office network, the competitive tendering process had been cancelled.

He said: "The Post Office is a cherished national institution at the heart of many communities."

Around 4.3 million people hold a POCA to obtain pensions and benefit payments including jobseeker's allowance and child benefit.

Bristol East MP Kerry McCarthy said: "Around 7,000 people in my constituency have a Post Office Card Account, and I have received over 700 letters and emails about this issue.

"This is great news for the Post Office. I recently met with James Purnell to discuss this issue and I am delighted that the government has listened to what I have been saying on behalf of local people."

Bristol City Council leader Helen Holland said: "This is great news and will bring much more business to the post office counter – and that in turn will help sustain the viability of the small Post Office."

She added: "I have heard from people who either can't or won't have a bank account who had been increasingly anxious about how they would collect their pensions and benefits in the future. I know that they will really welcome this news."

And Northavon MP Steve Webb said: "I am delighted that our campaigning in support of local post offices has been successful.

"I have received literally hundreds of postcards from concerned local residents about this issue and took it up directly with the Prime Minister.

"The government has kept postmasters in suspense totally unnecessarily for over a year over this decision and it is long overdue.

"I hope the government will now stop undermining the post office network."

The MP is working with community leaders in Tytherington to put together a financial package to enable the post office there to be reopened.

He said: "If the card account had been taken away, this would have meant the end for our attempts to reopen Tytherington Post Office."