Cuts in government spending mean airlines should not expect compensation for losses caused by volcanic ash, transport minister Theresa Villiers said today.

Speaking in a Westminster debate on the ash crisis, Villiers told MPs: “The government has not ruled out providing support to airlines, but I do not want to raise false hopes.

“European clearance for state aid would be required and the state of the public finances means such assistance may not be affordable.”

The bosses of the major UK carriers met transport secretary Philip Hammond last week to argue for compensation for assisting passengers and for loss of earnings due to the shutdown of airspace in April.

Villiers said the closure had “undoubtedly triggered controversy” and that it had “quickly became clear this was not a long-term solution” to ash in the atmosphere.

However, she defended the Civil Aviation Authority’s action, saying it mirrored the advice of aircraft engine manufacturers at the time.

She insisted the threat of disruption due to future eruptions “was one of the most important issues for the new government to address” and said the crisis would be on the agenda of European transport ministers at a meeting on June 24.

Pressed by several MPs to include airports in any compensation package, Villiers repeated: “The issue of compensation is very difficult in this era of financial restraint. It simply may not be affordable.”

However, she added: “Despite the undeniable burden on airlines, we expect pending [passenger] claims to be settled fairly, expeditiously and within the rules.”

The Treasury is preparing an emergency budget, to be announced on June 22, that prime minister David Cameron has warned “will change the way of life” in Britain for years to come.