Prime Minister Tony Blair is to announce a scheme to put automatic cash dispensers in rural post offices.

The move is an attempt to reassure countryside communities that the payment of benefits direct into bank accounts would not mean the death knell for local services.

Mr Blair is currently on a two-day visit to Devon and Cornwall, as part of an attempt to woo rural voters.

He said the first 400 of the 3,000 dispensers would be installed in the post offices this summer.

The Post Office has negotiated an agreement with a number of major high street banks to install the machines.

Rural shops

It is hoped the dispensers will provide residents of rural communities with ready access to cash and provide and incentive for them to keep using their local outlet.

Mr Blair is expected to say the move will give the Post Office to chance for a successful future and boost campaigns to save rural shops.

He will draw on personal experience of his constituency, which is largely made up of villages.

The Prime Minister has rejected calls to abandon plans to modernise both the Post Office, by giving it the freedom to seek private finance, and the benefits system, by paying electronically rather than through Giro cheques which traditionally had to cashed at the counter.

He said the government remained committed to modernising the Post Office, giving it greater freedom to compete in the modern market place.

On Thursday, Mr Blair's advice to farmers to investigate other ways of adding to their income led to protests in Devon.