The government has announced funding of £370m for Post Office Limited to help modernise the network and support branches serving remote and deprived communities.

The announcement comes as the Post Office published its annual financial report and posted a £13m profit - the first time the business has recorded a profitable result in 16 years.

Business secretary Greg Clark said: “With the network at its most stable in decades, this £370m of government funding will ensure the Post Office can continue to modernise and bring more benefits to customers across the UK.”

The funding, which will run until 2021, includes up to £210m for the transformation of the Post Office business and a further £160m to support branches serving small, rural, remote or deprived urban communities.

The Post Office is working with the government to improve its banking, cash withdrawals and deposit services. The statuary watchdog for postal customers, Citizens Advice, previously called on the government to confirm its funding of the Post Office.

A public consultation on the funding of the postal network closed in December 2016. The existing agreement between the government and Post Office Limited was due to end in 2018.

Post Office chief executive Paula Vennells said: “Making a profit for the first time in 16 years is a major milestone in the Post Office’s journey to a sustainable and successful business.

“We’re fulfilling the promises we have made, and this is recognised by the government’s further investment in the Post Office, which will enable us to continue transforming the business to meet our customers’ changing needs – a transformation that has already seen us make significant progress.”

The funding announcement followed the opening of the Post Office’s 7,500th modernised branch in Glyn Ceiriog, Wales.