The Department for Business Innovation and Skills (BIS) said the price of the top-up cover would also be reduced from 2% to 1%.
Following the launch of the top-up scheme in April's Budget, market information collected by the BIS found evidence that businesses are reducing their dependence on it and beginning to manage their credit risks more carefully, it claimed.
It added that the changes announced yesterday would allow more businesses to benefit from the scheme.
However, the scheme has previously been criticised for its limited scope and consequential poor adoption rates.
In June, its scope was widened following pressure on the government from businesses, although there was further criticism that its limited scope only covered instances where credit had been reduced rather than withdrawn.
The scheme has been launched on a temporary basis and will run until 31 December 2009.
A BIS spokeswoman said it is designed to help businesses readjust to the current environment.
Credit insurers Euler Hermes, Atradius, Coface and HCC are offering the scheme to eligible clients.