Equitable Life policyholders are to be paid compensation, the Government is expected to announce this week.

MPs will be told that an independent tribunal is to be established to determine the level of payouts, according to a report last night. Ministers may also formally apologise for regulatory failings in the run-up to Equitable's collapse in 2000, when policyholders lost an estimated £4 billion, but will not admit culpability.

Yvette Cooper, the Chief Secretary to the Treasury, is expected to make the announcement on Thursday. A Treasury spokesman told The Times that there will be a statement later this week.

Equitable almost collapsed in 2000 after the House of Lords ruled that it must meet its obligations on guaranteed annuity policies sold to more than one million customers.

In December, the Government provoked outrage when it abandoned a promise made by Gordon Brown to decide by the end of the month whether to set up a compensation fund for Equitable Life policyholders. The decision had already delayed once.

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