The new legislation, which was debated in a second reading in Parliament yesterday (July 3), aims to ensure Atol protection extends to travellers who book flights, hotels or car hire that are not sold as part of a package within 24 hours.

Ministers said the new bill would help to make it easier for financial protection to keep up with the pace of technology and consumers’ changing booking habits.

The bill’s measures will also allow the government to establish separate funds for different types of holiday and booking method.

The legislation was included in the Conservative manifesto and comes into alignment with upcoming changes to the Package Travel Directive, due to be brought into force in 2018.

The European Commission said the intervention was necessary to reduce “consumer detriment,” The Times reported.

Prime minister Theresa May said: “This government is committed to making our country fairer by ensuring consumers have the protections they deserve both online and offline. Technology has transformed the way people book holidays, and this bill will mean the Atol scheme can keep pace.

“Whether you book a getaway on the internet or the high street should not make a difference to knowing you won’t be stranded or left out of pocket if something goes wrong.”

According to Abta’s Holiday Habits Report more than three-quarters of UK consumers book their holidays online.

John Hayes, transport minister, added: “Atol was set up for a good reason. But people who buy their flights and hotels separately sometimes miss out on the protection, and peace of mind, that comes with this protection. The measures allow the government to set up separate funds for different types of holiday product and booking method, to provide greater flexibility.”