British airlines, insurance groups and the government reached a deal resolving a crisis of insurance cover that had threatened to keep aircraft grounded next week and paralyse air travel, a British government spokeswoman said.
"We have hammered out a deal," the spokeswoman at the transport department said. "The airlines wrote to the secretary of state expressing their concerns. A deal has been agreed which will keep the airlines flying after Monday."
The government gave no immediate details on the agreement but promised a statement at 7:00 pm. Chancellor Gordon Brown is to brief his European counterparts on the accord, a brief government statement said.
The deal would appear to end for the time being at least a crisis whipped up by shock waves reverberating from last week's terrorist attacks on the World Trade Center and Pentagon.
Insurances companies facing multibillion dollar losses from the carnage are engaged in a wholesale review of their business, and had told airlines that they would drastically reduce third-party insurance for war and terrorism liabilities from midnight on Monday.
Airlines wrote to the government warning for their part that this would bring British commercial aviation grinding to a halt, as they could not afford to send uninsured planes into the skies.
Analysts said the September 11 assault on the United States using hijacked aircraft and wreaking almost instant devastation in the heart of Manhattan would prompt a wholesale rethink of the way insurance is run.