In a statement on its website, the group said it had been hit by rising fuel costs and the credit crunch. It said all its flights have been cancelled and its fleet of aircraft are now grounded.

XL Airways provides flights to more than 50 destinations across Europe, America and Africa.

Passengers yet to travel should make alternative arrangements, while those already on holiday will be brought home on flights arranged by the Civil Aviation Authority, the statement said.

HAVE you been affected by the collapse? Has it ruined your holiday plans? Or have your got family and friends left stranded? Comment below or email eteditor@peterboroughtoday.co.uk
Customers who booked through four tour operators - The Really Great Holiday Company, Kosmar Holidays, Freedom Flights, and Aspire Holidays - are protected under the Air Travel Organiser's Licenses (ATOL) scheme, it said.

However, those who booked direct with an XL Group company are urged to contact ATOL immediately.

The statement said: "The companies entered into administration having suffered as a result of volatile fuel prices, the economic downturn, and were unable to obtain further funding.

"The joint administrators cannot continue trading the business and therefore all flights operated by the companies have been immediately cancelled and the aircraft grounded."

XL's demise is the latest blow to the British travel industry and follows the collapse of budget airline Zoom last month. Thousands of transatlantic passengers were left stranded after flights to and from Canada and the US were grounded as it called in the administrators.