Insurance companies who put hundreds of jobs in peril at Gatwick have been criticised by a committee of MPs.

The Government was forced to step in to provide its own cover to airlines after the insurance firms withdrew "terrorism cover" in the wake of September 11.

Businesses, including British Airways, would have been forced to ground their planes if the Treasury had not intervened because flying without insurance is not allowed by plane-leasing companies.

Experts said this would have forced the airlines to lay-off staff at major airports, such as Gatwick and Heathrow.

In its latest report on the air transport industry, the Transport Select Committee warns insurers' decisions could have had grave consequences.

It adds: "We condemn the hasty manner in which the insurance industry withdrew cover following the terrorist attacks.

"We welcome the Government's prompt and appropriate action in implementing short-term measures to ensure continuity of essential cover."

The report estimates about 20,000 jobs were lost in the aviation industry in the wake of the US terror attacks. But the MPs are optimistic about the future of the industry.

Earlier this week, The Argus revealed the average number of planes using the airport each day had fallen last year from 693 in 2000 to 673 as a result of September 11.

But, despite this reduction in services, there were very few free take-off and landing slots at Gatwick, according to the report.