The Government has cut the price of its credit insurance top-up scheme and doubled the amount it is prepared to underwrite.

It is the third revision to the scheme since it was launched on May 1.

The guarantee will now cost retailers 1% of the amount of business to be covered, compared with 2% previously. Government has also abolished a lower limit of £20,000 and increased the upper limit from £1m to £2m.

Government has been consulting with insurers and businesses on the scheme, which has come under criticism from the Association of British Insurers who complained it was too expensive.

Just 52 companies have benefited from £1.1m of cover so far.

When first introduced the scheme could only be used by retailers that had had their cover reduced from the start of April, but in June this was amended to include those that had had it reduced since October 2008.

The Department for Business Innovation and Skills said: “Today’s changes will allow more businesses to benefit from this extra breathing space so that they can adapt to their new circumstances in the longer term.”

The withdrawal of credit insurance was deemed to be a key contributing factor in the collapse of Woolworths last year.