A lost love for letters means posties will only deliver them to most Australians every second day, but parcels will still be dropped off daily.
After recording a $200 million loss, Australia Post is shifting its priorities to packages, with half a billion parcels delivered last financial year.
Postal workers were able to deliver 20 per cent more parcels during a trial of the skipped letter rounds.
But an extra delivery day will be added for letter deliveries to make up for the change.
Priority mail - which makes up eight per cent of addressed letters - will also be revamped in a bid for a faster service.
One postie will remain allocated to one round rather than needing to cover several routes, which is currently the case.
Australians receive an average of two addressed letters a week.
Communications Minister Michelle Rowland said Australia Post was still a viable service, and the delivery changes would ensure its success.
"We've seen around the world that government-sponsored postal services are failing, we will not let that happen to Australia Post, and the way that we ensure its sustainability is by making changes," she said on Wednesday.
"Doing nothing is not an option, but we want to bring the workforce with us to respond to the changing needs of Australians and ensure that Australia Post stays strong into the future."
Ms Rowland said despite the changes made to the service, the government would not move to privatise Australia Post.
"We recognise how important Australia Post is and the community service obligation that it provides, especially in rural and regional areas," she said.
Finance Minister Katy Gallagher said the organisation needed to save money to remain viable.
"The fiscal sustainability of Australia Post is vital to the government's ongoing commitment to provide high-quality postal services to Australians," she said.
Australia Post chief executive Paul Graham said the reform road map was a crucial first step in modernising the service, making it more sustainable while still providing secure employment for tens of thousands of posties and other team members.
"The changes to the frequency of letter delivery will enable us to focus on what matters most to Australians - fast and reliable parcel delivery with better tracking technology and quicker turnaround times for eCommerce," he said.
The service would continue to prioritise and protect vulnerable people, maintaining discount stamp pricing for pensioners and charities, while offering some of the lowest stamp prices in the developed world, he said.
Australia Post's proposal to jack up stamp prices from $1.20 to $1.50 from early next year is being reviewed by the consumer watchdog.
Prices for concession card holders will remain at 60 cents and Christmas stamps will still be 65 cents.
The introduced changes to the way post is handled is the result of a three-month trial beginning in May involving 28,000 customers in the Hornsby region of NSW.
Feedback from posties in the trial was positive, Communication Workers Union president Shane Murphy said.
"They said to us they would never go back to the old way they delivered," he told reporters.
The trial then expanded to sites in South Australia, Western Australia, Victoria and Queensland with customers providing feedback to Australia Post.
"From all aspects - community, posties and for the jobs of the future - there has never been a better outcome," Mr Murphy said.
