"The deficit when revalued by the trustees will show a deficit of between £8bn and £9bn," he told MPs on the select committee for business, enterprise and regulatory reform (BERR).
"We can't afford to pay double our pension contributions or pass them on to the customers as that will drive volumes down," he added.
Earlier, Tim Brown, chief executive of the postal regulator Postcomm, told MPs that removing the pension burden from the Royal Mail would not solve all its financial problems, such as those caused by declining letter volumes and the effects of the recession.
Royal Mail chief executive talks about its losses
It would help short term profitability and cash flow, but "that doesn't save them for the longer term" he told MPs on the BERR select committee.
However Billy Hayes, general secretary of the Communication Workers Union (CWU), said that the trustees' letter was "a distraction designed to scare MPs".
"Privatisation is not linked in any way to sorting out the pension fund. It's not even about protecting pension benefits, it's about making the company viable for take-over," he added.
About 140 Labour MPs have signed a motion opposing the part-privatisation.
The Hooper review, published in December, recommended that the government take over the Royal Mail pension scheme, to remove the burden of the deficit from the business, as part of a partial privatisation process.
Potentially to get the same pension, I might even have to work past 65
Ms Newell's letter echoes this, and warns that in its present state the company is financially very weak, and is technically insolvent with its debts outweighing its assets.
If the recommendations of the Hooper review are not pushed through, she argues, then the trustees would be forced to change the way they value the scheme.
That would increase even further the cost of paying pensions in the future for the scheme's 450,000 members, with the knock-on effect of making the deficit even larger.
As the Royal Mail could not afford to pay higher contributions, then this might trigger the collapse of the company and the closure of the scheme.
A larger deficit is "highly unlikely to be affordable by Royal Mail, with potentially devastating consequences", Ms Newell says.
"At present, in a winding-up the plan would not even be able to provide as much as 50% of members' benefits," she adds.
The company is already committed to paying an extra £284m a year, for the next 15 years, to pay off a £3.4bn deficit that was calculated in 2006.
Another valuation of the scheme has to be agreed by 30 June next year.
In December, Business Secretary Lord Mandelson, to whom Ms Newell's letter is addressed, endorsed the recommendations of the Hooper review that called for a minority stake in the business to be sold off.
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