MONTREAL - Canada Post rejected Monday the latest proposal from negotiators for 50,000 urban workers, but backed away from a thorny proposal to create more part-time positions to deal with a decline in mail.

"With the hope that (the union) would start to address the issues facing the postal system, Canada Post has offered to withdraw this key proposal," Canada Post said in a statement.

The Canadian Union of Postal Workers advised its members Monday evening that the Crown corporation had made some positive moves but also took several steps backwards. It said rotating strikes will continue for a fifth day on Tuesday.

"Today, after reviewing our June 3rd proposals for three days, (Canada Post) totally rejected our offer. They made virtually no effort to bring the parties closer together, and in fact, reneged on several of their previous proposals with respect to staffing," the union said on its website.

It didn't like the corporation's decision to withdraw an offer to create full-time positions when a part-time employee works 900 hours during a 30-week period.

The union also said pensions and disability coverage remain sticking points.

However the union said Canada Post did make a couple of positive moves related to the time an employee takes to handle advertising mail to households.

"The union will examine CPC's proposals and develop its response," CUPW national president Denis Lememlin said in a statement.

The union later announced postal workers in Moncton, N.B., and Victoria would begin 24-hour strikes at midnight local time. A strike in Montreal was due to end at 11:30 p.m. Eastern time on Monday.

Canada Post spokesman Jon Hamilton said negotiations with the union's urban barganing unit were continuing in hopes of getting a settlement, but added the union's latest proposal was too costly.

"It's just too expensive and still doesn't help us get anywhere near where we need to be in terms of addressing the challenges facing Canada Post," Hamilton said from Ottawa.

Canada Post says CUPW's proposal didn't offer solutions to problems such as declining mail volumes, increasing competition and electronic substitutions for traditional mail.

Canada Post said earlier Monday that despite the rotating strikes that began last week, most of the postal network continues to operate.

But businesses have warned that the postal system will soon get "gummed up" once the walkout expands to larger centres such as Montreal, where the union held a strike on Monday.

"One problem will beget another problem further down the food chain and the system will become gummed up, I would imagine, in a week to 10 days," said Dan Kelly, senior vice-president of the Canadian Federation of Independent Business.

Postal service was disrupted over the weekend in Hamilton and on Friday in Winnipeg.

George Smith of Queen's University said at some point the disruption to the public and businesses with rotating strikes will overwhelm the bargaining strategy.

"There's generally a level of tolerance for this kind of thing for a period of time if there's some hope that there is a settlement possible," Smith said of rotating strikes.

"By not declaring war on each other, maybe a settlement is possible," said Smith, a fellow at Queen's school of industrial relations in Kingston, Ont.

"There are diminishing returns to that strategy."

On the Prairies, the union said Canada Post pulled temporary letter carriers from their routes in Edmonton, Sherwood Park, St. Albert, Fort Saskatchewan and Camrose and in other communities such as Calgary and Saskatoon.

"We feel this move is sort of putting the public at hostage as way of trying to get some sort of leverage with the union at the bargaining table," said Edmonton local union president Bev Ray.

In some cases the temporary workers were told not to come back for at least two weeks or until they are called back, Ray added.

She said temporary workers inside Canada Post plants are experiencing a similar situation and permanent part-time workers have been told their hours will be cut back or have had their days off changed.

Hamilton said Canada Post has to manage its costs and informed the workers that until further notice there won't be overtime and casual employees won't be called in to cover absences.

"Some people may find that their mail doesn't get delivered but that will be the exception and not the rule. The majority of our routes are being covered."

For businesses, Kelly said he hasn't had any calls from panicked members yet saying that they felt any impact of the rotating strikes.

"The one thing about Canada Post is that customers are well used to delays," Kelly said from Ottawa.

But if rotating strikes also hit Toronto, Vancouver and Calgary, that's when Kelly said he expects problems to likely occur for businesses as the cumulative effects of rotating strikes would be felt.

"The strategy of gumming up the system and moving to larger distribution hubs will no doubt raise the stakes for small businesses."

Local Montreal union president Alain Duguay said the strategy behind rotating strike is to disrupt service as little as possible.

"Our objective is that the population suffers from it as little as possible," Duguay said, adding the union's battle is with Canada Post not its customers.

Sick leave benefits, and starting wages and health and safety issues working with new equipment were sticking points for the union.