Minister Denis Naughten says he is not prepared to jeopardise "the very survival of our national postal service"
The Government is giving An Post a €30 million loan in a bid to save rural post offices.
The loan will be repaid over five years, with €15 million being put directly into the post office network.
The Cabinet approved the funding this morning, saying the money will ensure that current services remain in place.
However, Communications Minister Denis Naughten said An Post will have to diversify as a condition for getting the funding.
He explained: "It's part of a broader reform of the company. It's probably the single biggest restructuring of a state company that has taken place since the foundation of the State.
"The company and the board have now put in place a four-year development plan - and I'm looking forward to seeing that being delivered."
Minister Naughten added: "There is no doubt that difficult decisions lie ahead but the reality is that without immediate action we could lose our national postal service.
"Doing nothing jeopardises the very survival of our national postal service and I am not prepared to let that happen.”
An Post posted a loss of €15.6m last year, but the company says it is on course to break even this year.
It says it has made a number of changes, including evening & Saturday parcel deliveries.
The company is also being restructured into two 'distinct businesses' - An Post Mails & Parcels, and An Post Retail (or post offices).
The company's CEO David McRedmond said he was pleased with the additional support offered by the Government today.
He observed: "The Company is facing into extraordinary challenges but by working collaboratively with all stakeholders including Government, unions and staff, we have already achieved a very significant turnaround in 2017.
"Much work remains to be done but with continued momentum and Government support, we will see the development of two great companies - An Post Mails & Parcels and An Post Retail - in the years ahead."