Dubai World is to ask its creditors for up to eight more years to pay back a $22 billion debt. The troubled investment fund, which owns the QE2 cruise liner and Cirque du Soleil, will promise creditors that it will be able to repay the entire debt if granted the extension.

The debt restructuring proposals will be proposed to a committee of the group’s senior creditors in Dubai this week.

Dubai World sparked a financial meltdown in the financial markets last year when it requested a standstill on repayments of $26 billion of loans it owed to nearly 100 banks.

The latest proposal is expected to come as a relief to the banks, despite a lengthening of exposure to Dubai. At one stage it was thought that creditors could be asked to write off up to 40% of their loans.

Banks will be offered repayment terms of between five and eight years, depending on the status of their loans.

According to The Times, Abu Dhabi is also expected to take part in the repayment deal by providing further financial support to its troubled neighbour.

Its $10 billion loan in January helped Dubai repay some of its immediate debts. The latest sum it will put up will be finalised over the coming days.

Dubai officials have insisted that the state will not conduct a fire-sale to help raise funds. However the QE2 and Cirque du Soleil are expected to be put up for sale to ease the debt mountain.

The government plans to hold on to its portfolio until property values recover and it can recoup some of its investment.