DORCHESTER'S main post office may be turned into a hotel.

Plans have already been unveiled to transform the South Street branch into a convenience store under a deal between cash-strapped Post Office Ltd and an independent firm.

Now the Post Office has said the company taking over the site, Counter Management Ltd, is considering converting part of the branch into a small hotel.

The Post Office insists an existing deal between the two companies to create a shop, retaining post office counters, will be unaffected by the move.

Post Office Ltd says the franchise agreement will ease its financial difficulties, caused by a drop in customers and increased running costs.

The company says the branch would keep the same number of post office counters, and doors would open half an hour earlier every day under the refurbishment, scheduled to start next January. The Post Office today said discussions had taken place about part of the branch - believed to be its upper floors - becoming a hotel.

A spokesman said: "The ownership of the South Street building is set to go into the hands of Counter Management Ltd.

"They have agreed to retain a Post Office and create a convenience store in the branch.

"As far as the rest of the building is concerned, we're aware there have been talks about the possibility of converting it into a small hotel in addition to the convenience store plan.

"Obviously this would be subject to a planning application and usual regulations. But it is something that has definitely been spoken about and is being considered.

"Our main concern is that a post office is retained at the site and we're happy that will happen."

Gary Hepburn, regional manager for consumer watchdog Postwatch, said there had been similar proposals for other post offices in the region.

"In those cases, the retail and post office side is often situated on the ground floor while the rest of the building is converted," he said.

Mr Hepburn said Postwatch would keep a close eye on the branch to check post office services were not phased out in the future.

"We welcome the fact the new organisation is promising extended opening hours and we will be watchful that they stick to their word," he said.

Counter Management Ltd was not available to comment.