As of October 2013, Royal Mail have introduced 2 'small parcel' sizes for delivery at £2.60 if under 1 kg using 2nd class.
The full details are :
2 small parcel sizes (one deep and one thin and wide)
weight : under 1kg
2nd class cost : £2.60
1st class : £3
(correct on October 13)
box sizes : wide : (length 45cm, width 35cm, depth 8cm)
deep : (length 35cm, width 25cm, depth 16cm)
Link : Royal Mail prices (2013 ?)
This would seem to be the cheapest 'small parcel' service on offer. I prefer myhermes but they are around £3.90 for 0-2kg (and size) but you can drop them off at an outlet probably 24 hours a day (e.g. local 24 hour shop) . Another alternative is Collect+
Royal Mail small parcel news page
Official Royal Mail Video about new Royal Mail small parcel service
