The move follows criticism directed at the Post Office by the Treasury Select Committee during an investigation into the rise of fee-charging ATMs in the UK. Around three quarters of ATMs located in UK post offices were found charge customers around £1.50 for making cash withdrawals. In total, the committee found that customers were charged £10m a year for using cash machines located in post office branches.

In a statement, the Post Office says it intends to cease participating in contracts with fee charging ATM suppliers, adding that the new machines will allow customers of all banks and building societies to withdraw cash free of charge.

Roll out of the new ATMs will start in the autumn. Over 300 machines will be rolled out to branches currently not offering an ATM service, while the remaining 700 will replace ATMs owned by other banking providers.

David Mills, chief executive of Post Office Ltd, says: "The Post Office is not only the biggest single cash network in the UK, it is also one of the most popular with free cash withdrawals at Post Office branches having trebled in the past year to almost one million a day. This deal is a significant step towards achieving our vision of free cash access for all, from any type of bank account, at Post Office branches."

Commenting on the deal, Brian Goggin, group chief executive of Bank of Ireland says: "This significant deal supports the Bank of Ireland strategy to expand its presence in the UK ATM market."

The bank established a financial services joint venture with the UK's Post Office in October 2003 which offers Post Office branded financial services products across the Post Office's 14,600 strong branch network, via the telephone and over the Internet.