The price of a first class stamp is to increase from 46p to 60p from the end of April, with the price of second class stamps also to rise.
Ofcom said that without giving Royal Mail the chance to increase prices, a universally-priced, affordable postal service, six days a week for businesses and consumers would be put in doubt.
Second class stamps will increase from 36p to 50p, with Ofcom setting a top price of 55p for second class mail – although this could go up with inflation.
The Post Office said it realised how hard times were for households and businesses but that it had no choice but to increase its prices.
Under the new prices, a first-class stamp for a large letter weighing up to 100g will increase from 75p to 90p from the end of April.
Royal Mail has pledged to freeze prices at the same point as Christmas last year for consumers on certain benefits, including Pension Credits and Incapacity Benefits.
People will be able to buy books of stamps at previous prices from Post Offices if they supply proof of benefits.
Consumer Focus has described the announcement as 'not great news for consumers'.
"I doubt anyone is going to think about the challenges facing Royal Mail when they are paying 60p for a first class stamp," said Robert Hammond, director of Postal Policy and Regulation at Consumer Focus.
"This is a very significant increase in the price of an essential service and those consumers who continue to use it will look much harder at the value for money and quality of service that they get.
"Royal Mail has not gone for the maximum allowable under the new regime. We hope that this is a sign that Royal Mail recognises that they cannot rely on pushing up prices to turn around its fortunes."
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