Two Post Offices in central Sutton are merging to create a single branch.
The High Street shop in the St Nicholas Centre will close down, with the Grove Road branch nearby being renovated to deliver extra services.
Work is expected to be finished around mid-November.
There will be nine counter positions at the Grove Road store, three more self-service kiosks, and two private consultation areas.
Sutton and Cheam MP Paul Burstow MP has called the decision to close the branch an insult to local people.
He said: "The High Street Post Office is incredibly popular, often with long queues to get served.
"It is accessible and close to a number of local businesses. No-one who I have spoken to over these past few months, except Post Office officials, thinks this is a good idea.
"I will be asking to see the results of the consultation to see what responses they received to come to this conclusion.
"Our next step will be to work with the Post Office to try and find a new location for a High Street branch.
"Services for the elderly and disadvantaged need to be at the heart of all proposals for this vital community service, and I will continue to press the Post Office to make sure that this is the case."
Mr Burstow and local councillors met several times with the Post Office and collected a 500 signature petition to save the branch.
Labour Party parliamentary candidate for Sutton and Cheam, Emily Brothers, said: "I am very disappointed by the decision to close the Post Office in the St Nicholas Centre.
"The St Nicholas post office is very busy, so closing it really doesn’t make sense."
The new Sutton Post Office will open 9am to 5.30pm on Mondays, Wednesdays, Thursdays, Fridays and Saturdays, and 9.30am to 5:30pm on Tuesdays.
The expanded site will be based at 19 Grove Road, Sutton, SM1 1AX.