Victims of overseas attacks set to receive same compensation as UK victims.

UK insurers could be hit with a bill of more than £3m a year to compensate the families of people killed or those injured in terrorist attacks abroad.

Ministers are poised to announce that the victims of attacks overseas will be eligible for the same level of compensation as victims of atrocities in Britain.

Tessa Jowell, the humanitarian assistance minister, has told the House of Commons the victims “should be treated in exactly the same way” as those affected by attacks in the UK.

The victims would be compensated from a joint fund worth about £3.5m, according to a government proposal. Up to £3m of this could be paid by insurers.

Under the proposal, travel insurance schemes would carry a special “kitemark” to guarantee they are part of the scheme, offering access to the compensation fund if terrorists strike.

The development, revealed in a Commons debate last Wednesday, represents a U-turn by ministers.

The debate was led by Ian McCartney, a former Cabinet minister, who said 190 British citizens had died and 156 more had been injured as a result of terrorist incidents abroad in the past 10 years. These include 11 Britons who died in an attack in Sharm el-Sheikh, Egypt, in 2005.

McCartney, who has now written to Gordon Brown to urge him to announce a detailed scheme as soon as possible, said: “It is the first time that Tessa Jowell has put in the public domain that the government is moving towards this agreement.”

A spokesman for the government said: “Work is ongoing on this issue. The minister was stating her personal view on what its conclusion will be.”