Feb 23 (Reuters) – The U.S. Postal Service announced plans on Thursday to close or consolidate 223 mail processing centers and eliminate up to 35,000 jobs as part of its strategy to cut costs by reducing its network of facilities. The Postal Service has been losing billions of dollars each year as email chips away at mail volumes and as it faces massive annual payments to the federal government. Postal officials said in September they would study more than 250 of the 461 processing sites for possible consolidation with other facilities as part of a series of cost-cutting steps. They also announced plans to end next-day delivery to cut back on overnight work. Postmaster General Patrick Donahoe has said the agency needs to reduce $20 billion in annual costs by 2015. Moving processing away from the 223 centers would reduce operating costs by $2.6 billion annually, according to the Postal Service's website. That includes eliminating as many as 30,000 full-time jobs and 5,000 non-career positions, USPS spokesman Sue Brennan said. The agency has gotten rid of about 140,000 jobs in the last five years, mainly through attrition, but still had about 650,000 workers at the end of 2011, according to its first-quarter financial statement. None of the facilities would close before mid-May due to a temporary moratorium announced in December that is intended to give Congress time to pass legislation to help overhaul the mail agency. The Postal Service, which does not receive taxpayer funds, wants Congress to eliminate an annual payment to prefund retiree health benefits and let it end Saturday mail delivery. The agency also wants to take over its health benefits from the federal government and to close thousands of post offices. Lawmakers have been deeply divided on whether to allow facility closures, end the prefunding payment and other measures. Some lawmakers have praised the Postal Service for "rightsizing" its network, while others say the planned closings will hurt the agency's business model. "At a time when the Postal Service is competing against the instantaneous delivery of information from email and the Internet, slowing down mail delivery service will result in less business and less revenue," said Senator Bernie Sanders of Vermont in a statement on Thursday. Donahoe told lawmakers last week, in a letter announcing the agency's five-year turnaround plan, that failing to take all of its planned cost-cutting actions could lead to annual losses of $18.2 billion by 2015.