With ongoing government support and 'some rationalisation', the network could be maintained for the long term,, trade and industry secretary Alistair Darling said.
The DTI said the current size of the network was 'unsustainable'.
Mr Darling announced that the annual subsidy of around£150m will continue until at least 2011 'with an expectation that a continuing subsidy will be needed after this'.
But Mr Alexander warned of the 'need for there to be some reduction in network size'.
'The Post Office provides an important social and economic role, particularly for our rural communities and deprived urban areas. Piecemeal closures are no good for anyone.'
Mr Alexander said that post offices face a long-term challenge. 'Internet, email and text messaging have meant that people, young and old alike, increasingly use the phone or internet banking, cash point machines or direct debits to pay their bills.
'People are increasingly choosing to access services in different ways resulting in some four million fewer people using their post office each week than two years ago.'
Post Office Ltd will open at least 500 new outlets to provide access to services for small remote communities using mobile post offices and hosting post offices in other businesses such as pubs, community centres and village halls.
Link to : consultation question: Do you think the government's forward strategy for the post office network addresses all the key issues and challenges the network faces?
Policy & politics