Barclays has been urged to reverse its decision to stop allowing customers of banks to withdraw cash from the Post Office for free.
The move comes at a time of rising concern about bank branches and free-to-use ATMs disappearing from rural communities.
It was described as "damaging and counterproductive" by the head of the review that is seeking ways to protect access to cash while a leading MP said Barclays bosses "need to think again".
The Payments Systems Regulator also said it was concerned about the impact of Barclays’ decision.
"We will be closely monitoring the steps Barclays plan to take to make sure there are suitable alternatives for its customers to access their cash — especially those who rely on cash or who live in rural areas," the regulator said.
Britain’s Post Office network has become increasingly important in plugging the gaps left by bank branch closures — which the banks argue are inevitable because more and more consumers are choosing to do their banking online.
Last year, the Post Office’s 11,500 branches handled more than 130 million transactions for UK banks.
Now, 28 banks have signed up to carry on with the arrangement for access cash and cheque banking services through the branches for another three years.
But the Post Office said it was "disappointed" that Barclays has chosen to stop allowing its customers to make over the counter cash withdrawals from January next year — though they will continue to be able to access other banking services.
Consumer group Which? recently found that the bank had closed 481 branches — around a third of its network — between the start of 2015 and August 2019.
Which? money editor Jenny Ross said: "Barclays’ shocking decision exposes the fragility of the UK’s cash system, and blows apart industry claims that the Post Office is a solution to the cash crisis."
Natalie Ceeney, chair of the access to cash review, said: "Barclays’ decision to withdraw from the scheme allowing its customers to access cash using the Post Office is damaging and counterproductive.
"Among Barclays’ vast domestic and international customer base, only a small number use this service, but it still amounts to 1.2 million cash withdrawals every month.
"The people who rely on this service are often in rural and isolated communities.
"For them, the Post Office service has been a lifeline and they will not readily understand Barclays’ decision."
Rachel Reeves MP, chair of the Commons business select committee, said: "Barclays need to think again.
"Access to free cash withdrawals at post offices is vital, especially to those who are elderly and vulnerable."
Barclays said it was pledging not to close branches in remote areas, or where it is the last bank in town, for two years and is also investing in an industry initiative under which communities with poor access to cash will be able to apply to have a free-to-use ATM in their area.
It said: "As the bank focuses its investment into free-to-use ATMs and cash back at businesses as the most efficient way for cash withdrawals, it is also reducing related reliance on the Post Office."
Adam Rowse, Barclays managing director for branch-based banking, said: "Barclays remains committed to the Post Office Framework and has increased its funding for the Post Office so that customers and businesses can still pay in cash, cheques and check their balance.
"However, the facility for over the counter cash withdrawals will end from January 2020. Cash withdrawal by cheque will be available subject to arrangement."