Business secretary Lord Mandelson announced on 9 June that eligibility for the scheme will be backdated to include suppliers that have had cover reduced since 1 October 2008.

It will also consider offering credit insurance where a company has had its cover withdrawn completely since 1 October, but has since had it partially reinstated.

Alistair Gough, managing director of Paperlinx's Robert Horne Group, said the merchant has seen credit insurance being reduced on customers that haven not fundamentally had a change to their business circumstances.

"The insurance industry continues to take a unilateral view of our market," he said. "If the government initiative continues to help any company that is financially sound - helping to manage their working capital more effectively and provide more underlying security for their business - then it should be considered to be a success."

Graham Griffiths, managing director of Premier Paper Group, said he has not seen any actual changes since the credit insurance scheme was announced last month.

He said: "As far as we are concerned it's a damp squib, and the changes announced on 9 June won't make much of a difference."

Also, the extended scheme will only be relevant to UK limits and will not cover reductions made by old underwriters if a company has changed insurers, according to Denmaur Independent Papers' managing director Mike Gee.

The scheme has previously come under fire for its limited scope and consequential poor adoption rates, as well as for only including companies where credit had been reduced, rather than removed.