The UK government-backed Troika aviation insurance scheme is to be extended for a month until the end of June.
This follows yesterday's announcement by the European Union that member governments would be allowed to extend cover for this period.
However, the scheme is being extended on new terms "in recognition of the improving availability of commercial cover for third party war and terrorism risks, and the undesirability of government schemes acting in competition with the market," the Treasury stated.
Premiums for airline cover between $150m (£103m) to $1bn (£0.7bn) will rise from 35c (24p) to 50c (34p) per passenger.
The level at which the Troika scheme starts to provide cover for airlines will increase three-fold from $50m (£34m) to $150m (£103m).
These changes will come in to effect on 7 June.
The government reiterated today that its aim is to withdraw completely from the aviation insurance market.
It said that should another terrorist incident like 11 September lead to a lack of third party insurance it would intervene again, possibly through a re-activation of the Troika scheme.
