The scheme was launched following the government's Budget announcement in April and was designed to assist companies that had experienced a reduction in trade credit cover.

Critics claimed at the time that the focus was too narrow and that companies tended to have credit insurance completely withdrawn, rather than reduced.

As a result, it now seems highly unlikely that the scheme, which is due to expire at the end of the year, will be extended in next month's pre-Budget report. Lord Mandelson recently said the "market is beginning to change, which suggests the sort of cover we put in place is no longer needed".

Mandelson also criticised the major insurers for not supporting the market for trade credit insurance.

Commenting on the news, invoice finance company Bibby Financial Services said that the shortfall was "a huge waste of funding".