An Post is to deliver more than €9billion to people in social welfare next year.
The contract is worth more than €50m to An Post every year and will support jobs and communities throughout the country.
Minister for Social Protection Joan Burton signed the two-year deal following a tender process.
"Roughly half of all welfare payments - amounting to more than 9 billion euro a year - go through the post office network, benefiting almost one million customers," she said.
"This money represents almost 20% of Government day-to-day spending, showing the significance of this hugely important contract.
"An Post and its postmasters and staff have always provided a trusted and valuable service to the department and to their local communities and I welcome the opportunity to continue working with them over the coming years."
The contract provides certainty for the foreseeable future to welfare claimants who receive their payments in cash at local post offices.
An Post chief executive Donal Connell said: "We are pleased to have won this important contract and we are fully committed to providing a top-quality service for both the Department of Social Protection and its customers.
"As leaders in the development and application of post office counter technology, An Post will continue to innovate and to invest in next generation systems and products for customers across our unique retail network."