The removal of Portugal from the travel quarantine list could be announced this week but would not be enforced until the end of August, The Telegraph understands.
It comes amid mounting expectation France will be removed from the Foreign Office’s 'green list' amid rising coronavirus cases.
Jersey has reclassified France as a higher-risk country for coronavirus, and made it compulsory for travellers to self-isolate for five days.
While the fate of several European countries hangs in the balance, fresh hope has emerged that travellers from Portugal will no longer be required to quarantine.
However, an industry source suggested the process of reinstating quarantine-free travel would take "much longer", with any status change likely to be announced "weeks ahead of the event".
The source said: "It could be that the Joint Biosecurity Centre say they are prepared to remove quarantine, but while that might be announced this week I don't expect they would lift it until the end of August.
"That gives the Government time to assess that the falling numbers are part of a longer-term trend rather than a blip. From a science perspective it makes sense but unfortunately it is likely to come too late for Portugal, which has seen its entire summer season lost."
The chaos caused by the short-notice quarantine announcement for Spain is understood to make ministers more keen for a delay for any change for Portugal to come into effect.
Conservative MPs on Sunday evening warned the UK is “completely behind the curve” on its “antiquated” quarantine policy.
“There must be a better system of keeping track of people – testing them immediately when they are back in the UK, and testing them a few days afterwards,” one backbench MP said.
Multiple travel industry insiders told The Telegraph they expected France to be taken off the “no quarantine list” by Thursday.
It comes amid concerns of “tit for tat” from France.
Tobias Ellwood, the Conservative MP who chairs the defence select committee, said: “We should anticipate France retaliating in the same way”.
Meanwhile, visitors to the Netherlands and Malta could also be required to quarantine on their return to the UK in the near future, a well-placed industry source also said, citing rising Covid-19 cases.
Travel bosses said state intervention is needed, as travellers continue to be left in the dark over changes to the Government’s travel list.
Noel Josephides, a director at the Association of Independent Tour Operators (AITO), said: “[Our members] who specialise in long haul have written everything off until October onwards. For the summer operators, the school holiday season is finished. You can't salvage that."
Tim Alderslade, the chief executive of Airlines UK, the trade body for airlines, said: “We’re entering perhaps the toughest winter season ever for the travel industry, and if we’re not able to open – and keep open – some of these major markets, including the US, we’ll be looking at further redundancies and an existential crisis for airlines.
“Extending the furlough scheme would help enormously, as would stimulus measures such as an Air Passenger Duty waiver, which would save many of the routes that will otherwise be lost this winter.”
Chancellor Rishi Sunak earlier this weekend did not rule out extending the furlough scheme in the event of a second coronavirus wave, but warned that it is not sustainable in the long run. He has previously repeatedly ruled out an extension.
A spokesman for the Association of British Travel Agents (ABTA) said it has asked the Government to consider a regional approach to travel restrictions, as opposed to blanket bans.
This would avoid situations whereby entire countries are added to the quarantine list because of localised outbreaks.
France’s tourism industry is expected to lose up €40 billion (£3.6 bn) because of the Covid-19 pandemic, with foreign holidaymakers staying away as the country grapples with a rise in infections.
Jean-Charles Cabau, manager of six restaurants in south-western France, said: “I’ve seen our revenue fall by 30 per cent.”