In Touch Holidays, based in Chiswick, west London, sold holidays to the Spanish Islands and had a Christmas holiday offer to Gran Canaria.

Around 100 people are either on holiday with the company or had booked, mainly for holidays between Christmas and early January 1999.

The Civil Aviation Authority says all customers who are already in Gran Canaria will be able to complete their holidays.

Those who are due to travel from 28 December will be able to claim refunds.

However there will be no further outgoing flights and customers will have to make alternative arrangements. People whose holidays are cancelled will be able to claim refunds from the ATOL bond, and the CAA will send them claim forms.