WASHINGTON (CNN) -- The U.S. Postal Service will be cutting more than 3,000 jobs and offering nearly a quarter of its work force early retirement as part of its efforts to streamline operations amid the worsening economy, the agency said Friday.
The Postal Service said work force cutbacks will save the agency $100 million annually.
Among the job cuts are 1,400 district administrative staff positions and another 1,400 mail processing and management jobs nationwide. More than 500 employees will be out of a job with the closure of six district offices that house only administrative functions, the agency said.
The cuts will save the post office about $100 million annually, the agency said.
The post office ended its first quarter -- October 1 through December 31 -- with a net loss of $384 million caused by a drop in mail volume of 5.2 billion pieces. The 9.3 percent drop was the eighth consecutive quarter of volume declines, the agency said.
In late January, Postmaster General John E. Potter warned Congress that service cuts may be necessary, telling a Senate subcommittee that the agency may be forced to cut mail delivery from six to five days a week.
Such a change would have to come from Congress, which mandated the six-day schedule in 1983.
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"We believe that legislative relief is necessary to preserve the nation's mail system," he told the committee.
With no congressional relief on the horizon, Potter announced plans in February to cut $5.9 billion in costs through fiscal year 2010, including eliminating 100 million work hours this year.
The agency cut nearly 27 million work hours during the first quarter last year. The agency also froze salaries of all officers and executives at 2008 levels, reduced travel budgets and stopped construction on new postal facilities.
The early retirement offer for 150,000 of the postal service's 646,000 employees will be the second round of such offers, agency spokeswoman Sue Brennan said. About 9,000 employees took advantage of the first round about three months ago, she said.
Additionally, 162,000 employees are now eligible for regular retirement.
CNN's Emily Anderson contributed to this report.
All About U.S. Postal Service • U.S. Congress
USPS headquarters in Washington, D.C..Tensions are running high at the U.S. Postal Service as it faces an enormous budget shortfall. Even after announcing it was cutting 3,000 jobs, the beleaguered government agency is still quickly running out of money. 

Postmaster General John Potter asked the United States Congress for help on Wednesday, once again bringing up the possibility of reducing mail delivery from six to five days a week. The service reduction would save approximately $3.5 billion this year. 

Another way to cut costs could include changes to how it pays for its employee retirement plan, which would save a further $2 billion. Closing small and rural post offices is another possibility that has been discussed. 

Many measures have already been taken to stem the agency's losses. Construction of new facilities has been put on hold and existing ones put up for sale, millions of man-hours have been cut, and executive salaries have been frozen. 

House Oversight Post Office Subcommmittee chairman Stephen F. Lynch (D-Mass.) has expressed reluctance with the plan to reduce service, saying "With the Postal Service facing budget shortfalls the subcommittee will consider a number of options to restore financial stability and examine ways for the Postal Service to continue to operate without cutting services."

Other than cost cutting, Congress could also appropriate taxpayer dollars to fund the struggling Postal Service, which currently does not rely on public funding outside of a subsidy for international voting mail and services for the blind. 

If nothing is done, the USPS will soon run completely out of money, and may be unable to pay many of its bills. Salaries are the agency's highest priority to continue paying, though other debts may have to wait to be paid, said Potter. Last year the Postal Service lost $2.8 billion.