LIVERPOOL, England (Reuters) - Britain plans to reserve at least 10 percent of Royal Mail shares for the company's staff when it privatises the group, Business Secretary Vince Cable said yesterday.

Trades unions representing Royal Mail's 155,000 staff are opposed to the sell-off and the government wants to win them around.

Speaking at his Liberal Democrat party's annual conference, Cable repeated plans for a full sale of the state-owned mail distribution service, hit by falling letter volumes and saddled with a multi-billion pound pension deficit.

"It (the planned legislation) will allocate at least 10 percent of the shares in Royal Mail to employees," Cable said.

"This will be the largest employee shares scheme of any privatisation for 25 years in terms of the number of workers who will benefit — second only to the privatisation of BT in 1984."

The government plans to look at the example of department store group John Lewis which has significant employee share ownership.

However, union reaction was hostile.

"Any offer of shares to employees is deeply patronising for people who have invested their working lives in this public service," said Billy Hayes, general secretary of the Communication Workers Union.

"The British public currently owns 100 per cent of Royal Mail and now 90 per cent is to be sold off to the banks and financial institutions that have created Britain's current financial crisis," Hayes added.

The government has not yet decided whether employees will be given shares or offered the chance to buy them at a discount. Aides said all options were open.

The previous Labour government last year shelved plans to sell a 30 percent stake in Royal Mail, citing market conditions but was also concerned over union reaction. "We do not believe there is a need for Government to keep a stake in Royal Mail in the long term — but we will retain some flexibility so that we can negotiate the best possible outcome," Cable said.