The government has bowed to pressure from the industry and extended its help on trade credit to cover more companies.

Chancellor Alistair Darling announced measures to support companies facing reduction in trade credit limits in his April Budget, but the scheme was widely criticised as being inadequate.

This week, first secretary of state Lord Mandelson reversed one of the most unpopular limitations, agreeing to backdate help to cover companies that had had their trade credit limits reduced since 1 October 2008.

Previously the scheme was not backdated, covering only reductions made after it took effect - long after the vast majority of reductions were made.

"This will help hard-hit food manufacturers weather the storm of the recession and have greater security in their trading relationships," said Food and Drink Federation director of member services Charlotte Lawson.

"However, we are disappointed government has not extended the eligibility of the scheme to British exporters. This will make them less able to compete against foreign suppliers with greater access to trade credit insurance."

The end date of the scheme, which is currently set to expire at the end of December, should be extended, added Lawson.