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In section 5, there is a question on Place of Issue of the naturalization certificate. By mistake i had written "London Newham" . Apparently we have to write either "Home Office London" or just "London". The post office check & send service declined to send the application because of this.

I called the passport help line and they said its fine although i am not sure they were very convincing.

Can i try using another post office? Or should i fill another application form? I dont want to approach my counter signatory again as he is a very busy person. Do you think this mistake will prevent/delay the application?

Tell the Post Office you are willing to take the risk against their advice (they will ask you to sign something so you can't claim the fee back if refused).

It will be fine.