Details of reform to consumer financial protection, including a new ‘flight-plus’ Atol for online and high street retailers, will be announced on Thursday, Travel Weekly can reveal.

Ministers at the Department for Transport will release details of the proposed extension of the Air Travel Organisers’ Licence (Atol) scheme in a written statement to Parliament.

The announcement will initiate a three-month consultation with the industry and culminate in a statement to Parliament later this year that would introduce the changes from January 2012.

Transport minister Theresa Villiers made clear the intention of the reform last week when she said confusion among holidaymakers had to be addressed, adding: “The court’s interpretation of a package holiday in the recent Travel Republic case has compounded the problem.”

The case was brought by the Civil Aviation Authority (CAA), which argued Travel Republic was in breach of the regulations by not holding an Atol. The court rejected this.

The aim of the reforms will be to extend protection from traditional tour operators’ packages to holidays comprising separate flights and accommodation ‘dynamically’ packaged by retailers.

Up to five million holiday bookings a year that currently go unprotected will be brought into the Atol scheme.  Consumers will face an additional charge, initially £2.50 per person, but likely to fall over time.

The implications for retailers are less clear. Travel association Abta – formerly the Association of British Travel Agents – has lobbied for the change, but wanted reform to go further and encompass airlines such as British Airways and easyJet.

Although the association will continue to lobby for this it won’t happen in the current round of reform and it is doubtful whether airlines will ever be brought in.

However, some Abta members, including Travel Republic, are opposed prompting calls for the flight-plus change to be boycotted. Opponents fear the change will put retailers at risk if a supplier, such as an airline, fails.

They also fear tax inspectors will seek to levy VAT on Atol-holding retailers – since current Atol-holders pay this, through the Tour Operators Margin Scheme, but travel agents do not.