Ryanair has agreed to change its passenger terms and conditions following action from the Office of Fair Trading (OFT).
Ryanair has agreed to make changes
The OFT told the airline to improve the options it offered passengers facing delays and cancellation, to comply with EU law.
In addition, the OFT told Ryanair it could not exclude sporting, infant and musical goods from lost baggage claims.
The changes would "benefit passengers", the OFT said.
The EU introduced enhanced rights for air passengers facing delays and cancellations in February 2005.
At the time, some budget airlines said that the new rules would be expensive and could lead to higher fares.
Ryanair said it would post details of its new terms and conditions on its website.
The OFT said it expected other airlines to learn the lessons of Ryanair's case.
"We expect other airlines using similar terms to stop doing so immediately," said the OFT's director of services Ray Hall.
"Continued use of such terms will be considered a breach of Unfair Terms in Consumer Contracts Regulations 1999."