The industry watchdog asked the government-owned company late last year to review its compensation limits, pointing out that the $50 cap for lost ordinary mail had been unchanged since 1987. Postal Industry Ombudsman John McMillan said that, because of inflation, the real value of the pay-out was now less than half of the 1987 amount.

But Australia Post said there was no reason to increase the maximum compensation, partly because it usually paid customers less than the cap anyway.

The deliverer, which is Australia's only supplier of ordinary postal services, also offers customers up to $100 if it loses registered post or cash-on-delivery mail.

But this amount, too, has remained unchanged since it was set up 13 years ago. The real value of the pay-out, due to inflation, has dropped about 30 per cent since 1996.

Australia Post allows customers to buy extra insurance of up to $5000 for registered parcels and mail.

But Professor McMillan said this was unfair for people with limited alternatives.

He recommended the company adopt a British-style compensation scheme, which caps pay-outs at 100 times the postage cost.

Professor McMillan's office received more than 2200 complaints about Australia Post last financial year, of which one in five concerned compensation payments.

For more on this story, see today's Canberra Times.