The European Commission has relaxed package travel directive regulations amid the coronavirus pandemic.
The legislation states package organisers must take out insolvency protection to cover refunds and repatriation in case of bankruptcy.
However, ABTA has said the commission is now encouraging customers to accept credit notes which can be used for a full refund at a later date or used towards a new booking.
Mark Tanzer, ABTA chief executive, said: “ABTA has been in urgent talks with government ministers and officials throughout the week, as well as working with European trade associations at a European government level, to progress the asks that we set out in our letter to the prime minister on Monday.
“Today, the European Commission updated its guidance on the package travel directive in relation to customer claims refunds.
“It encourages customers to accept credit notes, as long as the customer is allowed to ask for a full refund, eventually, if he or she does not make use of the credit note towards a new booking.
“Crucially the commission states that the credit note should be covered by appropriate insolvency protection.
“This is an extremely positive step and shows that the commission recognises the strains being placed on tour operators due to coronavirus.”
He added: “The package travel directive is the legal framework on which the UK package travel regulations are based, and we now need the UK government to follow the European Commission’s lead and confirm a similar approach.
“This new guidance will give customers the essential assurance that they will either get a holiday or their money back, as well as providing a much needed helping hand to travel companies through these difficult and unprecedented times.”