New laws are needed to prevent travellers being left in a “ridiculous situation” following the collapse of firms such as Thomas Cook, the transport secretary says.

Grant Shapps was speaking after the travel giant went into liquidation earlier this week, leaving 150,000 passengers having to be repatriated to the UK.

Mr Shapps told parliament that he hoped new laws would enable stricken travel firms to be wound down in a “more orderly” way.

He said the government would examine the “reforms necessary to ensure passengers do not find themselves in this ridiculous situation ever again”.

He added: “[Travel companies] need to be able to look after their customers and we need to be able to ensure their planes can keep flying in order that we don’t have to set up a shadow airline.

“This is where we will focus our efforts in the next couple of weeks.

“We will require primary legislation, and, dare I say it, a new session of parliament.”

Mr Shapps used Germany as an example, where he said insolvency rules allow for administration to take place but for aircraft to keep flying and other buyers to come in.

He said such a law in the UK would “make repatriation massively easier because we could use those airlines”.

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A review launched after the collapse of Monarch Airlines in 2017 called for a new levy on tickets to pay for the repatriation of passengers when carriers go bust.

When the review was published in May this year, chairman Peter Bucks said: “We know passengers expect to be protected from being stranded overseas if their airline should collapse, but in practice, each year many people fly without such protection.

“Although airline insolvencies are relatively rare, as we have seen in recent months they do happen – and at times have required government to step in to repatriate passengers at great cost to the taxpayer.”

Airlines rejected the levy proposal, however, saying industry costs were already too high, prompting then transport secretary Chris Grayling to vow “swift” reforms to “secure the right balance between strong consumer protection and the interests of taxpayers”.

On Wednesday, it was announced that Thomas Cook’s Polish division Neckermann Polska has been declared insolvent, intensifying the crisis over the group’s collapse.

The Condor holiday flight operation in Germany is safe for now after the government there granted it a £350m six-month bridging loan.

Meanwhile, some 120,000 UK holidaymakers who are still stuck abroad have been advised to “enjoy the rest of their stay” amid continuing difficulties over payment demands by resorts.

The message came in an update from the Civil Aviation Authority (CAA), which is leading the £100m UK repatriation effort.

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