The government has included a clause in the Civil Aviation Bill giving it the option to bring holidays sold by airlines into the Atol scheme.

The Bill, introduced to Parliament on Thursday, also gives the option to bring holidays sold as ‘agent for the consumer’ under Atol financial protection.

Abta welcomed the move, hailing it as “a major step forward”, and called on the government to act “at the earliest opportunity”.

The core of the Civil Aviation Bill redefines the role of the regulator, the Civil Aviation Authority (CAA), giving it a single primary duty to promote the interests of passengers – as opposed to all airport users as now. The CAA will also become responsible for overseeing aviation security, although the government will retain control of security policy.

Aviation minister Theresa Villiers said: “The Bill includes a clause that would widen the Secretary of State’s powers so that holidays sold by airlines or arranged on an ‘agent for the consumer’ basis could be included in the Atol scheme.”

However, she said: “The government’s intention is that such a step would only be taken following full consultation.”

Abta chief executive Mark Tanzer said: “We welcome the extension of the Secretary of State’s powers. Only with the inclusion of holidays sold by airlines will the Atol system be truly comprehensive, transparent and fair. We now look forward to the government making an explicit commitment to this.”

But Tanzer added: “A further consultation on this matter is unnecessary. We would urge the government to act at the earliest opportunity to avoid further confusion for consumers.”

A Department for Transport statement on the full range of Atol reform proposals is expected within days.

Villiers said the wider powers in the Bill “will put the needs of passengers unambiguously at the heart of how our major airports are run. They will . . . give the CAA more power to tackle the issues which matter to passengers.”

One consequence will be a small shift in the cost of financing airport security from the government to the aviation sector. The government estimates the saving to the Treasury at more than £4 million a year.