Chancellor Rishi Sunak is under fresh pressure to extend the furlough scheme as pubs and restaurants in coronavirus hotspots look set to face new restrictions.
He has been urged to guarantee that the Government will help to pay the wages of employees who cannot work before any new shutdowns are mandated.
According to the Times, Mr Sunak will on Friday announce a new package of support for hospitality workers hit by the closures. The localised scheme will remain in place for as long as businesses are locked down, the paper reported.
It comes as the Government's furlough scheme - which supported millions of workers during the height of the pandemic - is set to end at the end of October.
It will be replaced by a less generous Jobs Support Scheme, which will see the Government pay up to 22per cent of wages for workers who come back part-time from November 1.
With new measures expected to be introduced affecting the hospitality sector, Liberal Democrat's treasury spokeswoman Christine Jardine said the "fundamental premise for ending the furlough scheme no longer holds".
In a letter to the Chancellor, Ms Jardine wrote: "We are now in the midst of a second coronavirus wave with reports that businesses, especially those in the hospitality industry, could be ordered to shut within days."
Ms Jardine added: "The first Government-imposed lockdown was followed by the Job Retention Scheme. Now that Government is about to bring back business shutdowns, it must retain the furlough scheme.
“[Mr Sunak’s] Winter Economy Plan ruled out an extension to furlough with the argument that 'as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough'.
"But it is now perfectly clear that the economy is not reopening - it is facing new Government-mandated closures."
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Ms Jardine continued: "When Government orders businesses to close, it should be good practice to support the livelihoods of their employees - and ensure that businesses remain viable until restrictions are lifted.
"I urge you to commit to the extension of the Job Retention Scheme to support the jobs and businesses that will not be allowed to operate. It is essential that this guarantee is given before new shut-downs are mandated."
