The government said on Friday it reached agreement with insurers to ensure millions of homes and businesses in areas at risk of flooding will still receive cover in the light of last year's devastating floods.

Large swathes of western and northern England were deluged by the worst floods in 60 years, leaving insurers with an estimated bill of some 3 billion pounds.

In the aftermath, some insurers warned they might not be able to provide cover in flood-prone areas unless defences were improved.

Under the deal agreed with the Association of British Insurers (ABI), companies will provide cover for homes and small businesses under household and commercial insurance, where the annual flood risk is no worse than 1 in 75.

Furthermore cover will be offered to existing domestic and small business customers at significant flood risk, providing there are plans to reduce the risk to an acceptable level within five years.

"Working together we have succeeded in ensuring that flood cover is available in both the short and long term," said Floods Minister Phil Woolas.

"I'm delighted that the industry has agreed to work with us to raise awareness and encourage homeowners to take steps to protect their homes where appropriate."

As part of the deal, the government has promised to raise public awareness and understanding of flood risk, put in place a long term investment strategy and ensure planning systems prevent development in flood-risk areas.

"We are pleased that the government recognises that a long-term investment strategy, adequately funded, is the best way to manage the growing flood threat," said ABI Director General Stephen Haddrill.

"It will help ensure that the flood insurance protection, relied upon by millions of householders and businesses, remains widely available."

Campaign group Flood Forum welcomed the move, but said large excesses attached to policies meant that cover was impractical for many people.

"A lot of people are saying their excess, which is the bit that they pay initially, has gone up about 5,000 pounds and the worst case scenario I've heard is 30,000 pounds," the forum's chief executive Mary Dhonau told BBC TV.

"Technically you've got insurance but in practice most people don't have between 5,000 and 30,000 pounds stashed under their mattress to pay for the excess."

Last month disaster modelling firm Risk Management Solutions said a quarter of British homes with a total value of 600 billion pounds were at risk of flooding from heavy downpours or rivers overflowing.