The agency will start the process of closing nearly 2,000 post offices in March, the Wall Street Journal reported.
These would be in addition to the 491 post offices the Postal Service said it would close starting at the end of last year.
It is also reviewing another 16,000 post offices, which are half of the nation's existing post offices that are operating at a deficit, the report added.
The agency reported USD 8.5 billion in losses in fiscal year 2010.
It owes the US Treasury USD 12 billion and plans to save up to USD 500 million in the next two years through this cost-cutting measure.
The agency will have to lobby the Congress to allow it to change the law so that it can close unprofitable post offices.
Currently, the law permits the postal service to close post offices only for maintenance problems, expiration of leases and other reasons that do not include profitability, the Journal said.
A number of the 16000 post offices under review are in rural or smaller suburban areas.
"We want to make the smartest decisions possible with the smallest impact on communities," the Journal quoted vice president for delivery and post office operations Dean Granholm as saying.
He said the agency is identifying locations that are operating at a deficit and looking "for the opportunity to start the process of closing.
"According to the postal service, its network of some 32,000 "brick-and-mortar" post offices has become outdated at a time when people pay bills online and send messages through text or email rather than letters.