By Nick Triggle
Health reporter, BBC News
Since the mid-1980s plasma products have been heat-treated to kill viruses
Victims of the contaminated blood scandal have accused the government of treating them with contempt.
Thousands of UK people - mainly those with haemophilia - were infected with HIV and hepatitis C during the 1970s and 1980s after using blood products.
An inquiry had called for an overhaul of the victim pay-out system, but ministers refused, promising only extra funds for those with HIV.
Campaign groups condemned the response as "unacceptable".
They were joined in criticising the announcement by the head of the inquiry, Lord Archer of Sandwell.
His two-year investigation was privately-funded as the government has always rejected demands for a full public inquiry - although officials in Scotland have agreed to one.
Instead of agreeing to a full reform of the pay-outs system, which victims have said is demeaning because parts of it is means-tested, ministers promised to pump extra money in for people with HIV to double average annual payments to £12,800.
The fund for people with hepatitis C, which works through a series of lump sum payments and was set up much more recently, has funding available until 2014 after which it will be reviewed, the government said.
Public health minister Dawn Primarolo said: "I would like to offer my deepest sympathy to all those who suffered in this tragic episode.
"Sadly, it was not possible to effectively test for these viruses in the 1970s and early 80s and we deeply regret that these events occurred following NHS treatment."
But the Tainted Blood campaign group described the changes as "insulting and degrading".
And Chris James, chief executive of the Haemophilia Society, said the response showed "contempt" towards the victims.
"The government talks of moral responsibility but has seen fit to try to ignore or water-down Lord Archer's recommendations. It is simply unacceptable for ministers to propose such a collection of half measures."
Lord Archer's report, which was published in February, called the contaminated blood scandal an "horrific human tragedy".
Nearly 5,000 people were exposed to hepatitis C before the heat treating of blood products began in the mid 1980s.
Of these, more than 1,200 were also infected with HIV.
Almost 2,000 of those people have since died as a result.
Much of the contaminated blood is thought to have come from the US where it was taken from "skid row" donors, such as prison inmates, whose risk of infections was much higher than the general population.
Lord Archer said commercial interests appeared to have been given a higher priority than patient safety.
However, he added the UK was slow to react in everything from becoming self-sufficient in blood products to recognising the scale of the problem.
Lord Archer called for a government-backed payment scheme to replace the ones that are administered by charitable trusts, which victims have complained can be hard to access.
He also wanted to see a committee of specialists be established to act as official advisers to ministers over on-going compensation claims and the treatment of victims.
This was again rejected by the government, which would only commit to meeting an official group of doctors and patients twice a year.
Lord Archer said the government response was a "faltering step that only compounds the anguish of the afflicted and bereaved".
Meanwhile, the government has also revealed more than 800 people have a heightened risk of vCJD.
The group, again mostly people with haemophilia, received blood products from a donor who went on to develop the brain disease.
It comes after a man in his seventies died with traces of vCJD in his spleen. His death was due to an unrelated cause, but he was thought to have been the first person to have got the brain disease from contaminated blood.