The government has assured people suffering from asbestos-related disease that a ‘fund of last resort’ is still on the agenda, nearly two years after a report called for its creation.

Department for Work and Pensions (DWP) minister Lord Freud is understood to be in negotiations with the insurance industry about setting up a fund for victims who cannot trace insurers. A spokesman for the department said: ‘We continue to talk to stakeholders and we plan to make an announcement in due course.’

In February 2010, a DWP consultation paper found that thousands of sufferers of asbestos-related disease were missing out on compensation through no fault of their own.

The Association of Personal Injury Lawyers said it is essential to set up the fund while victims are still alive.