The ATOL protected refund credit notes system has been extended until the end of April.
The scheme was due to expire at the end of March, with the latest decision to provide a short-term extension coming in the wake of continued disruption to the travel sector.
The current expiry date for ATOL protection of refund credit notes remains September 30th.
This means that consumers whose package holiday bookings are cancelled continue to be able to safely accept a refund credit note where it is suitable for them.
Consumers are entitled to a cash refund for a cancelled package holiday should they not wish to accept a refund credit note.
All valid refund credit notes currently benefit from ATOL protection until September, at which point government backing for their ATOL protection is set to end.
Officials said they recognised in some circumstances, it may not be possible for consumers to redeem their refund credit notes before this date and is working with government to finalise a further update, which is expected shortly.
Paul Smith, consumer director at the UK Civil Aviation Authority, said: “Consumers are entitled to a full refund for cancelled package holidays.
“However, extending the deadline for issuing ATOL protected refund credit notes allows travel companies to offer this option, meaning that consumers will not be at financial risk if they choose to accept a refund credit note.”