Airlines are facing the prospect of the indefinite grounding of their aircraft from next Tuesday because insurance companies are unwilling to continue providing war cover.

Coming in the wake of the news that British Airways has sacked 7000 staff and cut flights by 10 per cent in an attempt to address "the anticipated reduction in demand", airlines around the globe are lobbying governments to pay special surcharges of up to 400 per cent to permit them to continue flying.

Although similar arrangements were made during the Gulf War of 1991, insurers believe the risk is more severe on this occasion and have warned carriers that existing war cover will cease at midnight on Monday if the increased premiums have not been met.

Stephen Byers, the transport secretary, said yesterday that the government was considering "targeted support" for airlines to assist them in meeting the extra security and insurance costs they are now facing.