In a move which exceeded expectations, shares in the Royal Mail jumped 36% from the government’s offer price of 330p to 450p just after 8am when they begun trading in the grey market.

Demand for shares has far outstripped supply, with almost 700,000 private investors applying.

In total the retail share offer was seven times oversubscribed, prompting criticism that the privatisation undervalues Royal Mail.

Private investors who applied for the minimum £750 up to £10,000 will receive shares worth £749.10. Applications for more than £10,000 will receive nothing.

Royal Mail employees will have their applications met up to £10,000.

Employees were also given a free allocation of shares, with 99.7% of staff taking up the offer.

The government has retained a 38% stake in the company.

Royal Mail shares will not be listed on the Stock Exchange officially until next Tuesday, with two days of conditional trading first.