The European Commission has extended a waiver allowing national governments to underwrite airline insurance against terrorist attacks for another four months.

The waiver, introduced after the 11 September attacks, will now run until 31 October.

It had expired at the end of June.

The move comes in response to a sharp increase in insurance premiums since the 11 September attacks, piling further financial pressure on major airlines already struggling to cope with a slump in passenger numbers.

"The conditions of insurance are still not the normal ones. The rates are still too exaggerated," a commission spokesman said.

Emergency aid

The commission said in a statement that extending the waiver was designed to restore some stability to the market for air travel.

The extension, which was widely anticipated following leaks to the media earlier this week, comes after a similar move from the US government.

Federal US guarantees for airlines, which expired on 18 June, were given a 60-day extension last month.

The EU, anxious to ensure fair competition between national industries, only allows governments to subsidise companies under exceptional circumstances.