Postal workers announced they would shift their rotating 24-hour strikes to Quebec City and Kitchener, Ont., tonight, after Canada Post said it would reduce its urban mail delivery service to three days a week in response to what it says is drastically reduced revenue due to the ongoing labour dispute.

The Canadian Union of Postal Workers has been holding rotating strikes in various cities across Canada as negotiations between the Crown corporation and the union grind along with little progress.

The strikes began just under a week ago and have crippled business for Canada Post, forcing it to cut services, said Jon Hamilton, a spokesperson for the employer.

"This is a temporary situation based on the impact this strike situation is having on our volumes," he told CTV News Channel, noting that volume has dropped 50 per cent since the strikes began.

With people choosing not to use Canada Post, the corporation is simply unable to continue operating at full capacity, Hamilton said.

"We need to take some measures, so urban letter carriers will move to three days a week and that's what Canadians will notice and within our plants we're going to reduce hours as well."

He said Canada Post employees will continue to collect mail from mail boxes on a daily basis, and post offices will stay open.

Letter carriers in urban areas will work Monday, Wednesday and Friday and will only be paid for those days, he said.

People who would normally have their mail delivered by a uniformed carrier using a mail bag will be most affected by the reduction.

Rural residents who normally have their mail delivered by a non-uniformed carrier, driving his own vehicle, will not be affected.

On Wednesday, the CUPW held rotating strikes in Calgary and Edmonton. On Thursday, work stoppages were carried out in the following smaller communities:

Labrador City, N.L.

Acadie-Bathurst, N.B.

Summerside, P.E.I.

Ste. Therese, Que.

Jerome, Que.

Thunder Bay, Ont.

Hearst, Ont.

Brantford, Ont.

St. Thomas, Ont.

Flin Flon, Man.

Yellowknife, N.W.T.

Whitehorse, Yukon

Vernon, B.C.

They will return to work Friday.

About 800 employees were expected to be involved.

Contract talks between the Crown corporation and the union stalled Thursday evening, Canada Post said.

The post office said the two sides remain far apart on several key issues.

"We still have a generous offer on the table, the union's counter offer is unacceptable," Hamilton told The Canadian Press.

Canada Post said the union rejected "major compromises" to address sick leave and staffing levels. The union also wouldn't discuss initiatives that would reduce costs and address the problems of declining mail volumes, Canada Post said.

Gerry Deveau, CUPW national director for Ontario, told The Canadian Press the union found it unacceptable the proposal had nothing about staffing.

John Bail of the CUPW executive said on Wednesday that Calgary and Edmonton were chosen for strike action because both suffer from a chronic shortage of Canada Post workers.

The Canadian Press cited Bail as saying there are "a lot" of unresolved issues between the union and management.

However, Bail said the union sees no need yet for a nation-wide strike and will continue with the rotating strikes for now.

The last time postal workers walked off the job in Canada was 1997. It lasted two weeks until the government forced them back to work through legislation.

Minister of Labour Lisa Raitt said on Wednesday she has no plans to do the same this time around.

"A deal they reach themselves is the best deal," she told CTV's Power Play.