The flotation is now expected to launch in October. It is considered to be essential for the survival of the service, which has seen revenues hit by the rise of email, and by competition for lucrative delivery services from rivals like TNT.
Fallon emphasized the importance of the parcels business, fueled by the rise of e-commerce firms like Amazon and eBay.
"Royal Mail needs to invest in its future and continue to modernize. It can't compete against schools and hospitals for government's cash, that's absurd," Fallon said.
"This is the right time to get on with this to allow Royal Mail to get access in the capital markets and invest in the future."
There are concerns that union unrest may affect the flotation. Royal Mail chief executive Moya Greene will meet representatives of the company's 4,500 workers in Birmingham Thursday morning, to try and persuade them to support the privatization. Workers have been offered a sweetener of 10 percent of the shares, which is predicted to be valued at around £2,000 each, but are still protesting against proposed pay rises. One major union, the Communication Workers Union, is expected to vote next week over a one-day strike.
Chuka Umunna, the opposition Labour Party's shadow business secretary, said: "Ministers are pushing ahead with this politically-motivated fire sale of Royal Mail to fill the hole left by George Osborne's failed plan. This is taking place despite opposition from a huge coalition.
"The Government has not addressed the huge concerns which remain on the impact the Royal Mail sale will have on consumers, businesses and communities, but ministers are ploughing on regardless."
Greene said in a statement she wanted a "revitalized company... that combines revenue growth and margin progression to underpin strong cash flow generation."
By CNBC's Catherine Boyle. Follow her on Twitter:@cboylecnbc