The UK Government will continue the furlough scheme until the end of April 2021 in an effort to ensure firms are able to survive the continued economic disruption.
Rishi Sunak also confirmed he would be extending the guaranteed Covid-19 business loan schemes until the end of March.
The changes come ahead of the UK Government’s budget, which the Chancellor has revealed will take place on March 3 2021.
During his address next year, Mr Sunak is expected to set out the next phase of plans to help the country bounce back from the economic impact of the pandemic.
The Coronavirus Job Retention Scheme, also known as furlough, had been due to be wrapped up at the end of March.
According to Westminster, the initiative, which allows firms to claim 80% of employees’ salaries from the government for hours not worked, has protected 9.6 million jobs across the UK.
It’s also claimed more than one million businesses have accessed loans.
Tens of thousands of jobs have been lost in the North Sea oil and gas industry in the last few months as firms attempted to keep their heads above water.
Union bosses previously said that past extensions to the furlough scheme came too late to stem the tide of redundancies in the sector
Mr Sunak, said: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.
“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”
Business Secretary, Alok Sharma, said: “While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.
“Extending government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”