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Guidance on what constitutes a package, published on Thursday, explains the law for retailers without ending uncertainty about when agents need an ATOL.

The long-awaited note from the Department for Business, Enterprise and Regulatory Reform leaves a grey area where a retailer sells a flight, room or other service one after another, but separately.

It says an ATOL is required "if an agent offers dynamic packages that include flights". But states: "The sale of more than one travel service sequentially, for a single payment, need not in principle be a package."

The guidance, What is a Package?, is based on a 2006 Court of Appeal judgment in a case between ABTA and the Civil Aviation Authority.

ABTA head of legal services Simon Bunce said: "The guidance could have gone further. But the judgment is open to interpretation and that is the heart of the problem. It has taken BERR a year to come up with this. The existing regulations are complicated and there is a need to change them."

He added: "If you are not selling a package, best not call it one."

Federation of Tour ­Operators director-general Andy ­Cooper said: "The guidance is a decent stab at a user-friendly version of the judgment. But there ­remains a problem. It will be difficult to define when a sale has been sequential."

Where this leads to a legal case, the guidance says a court will consider 'evidential pointers' - including any brochures or advertising, billing and ­payment - and then the customer's perception.

Bunce described the guidance as helpful, but said: ­"Anyone in doubt needs to get advice."

The CAA believes some ­businesses will have to change the way they operate.

CAA consumer protection group deputy director David Moesli said: "We will be ­clarifying the position to ATOL holders and talking to trade ­associations."

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