Rishi Sunak, the Chancellor, will announce an extension to the furlough scheme on Friday, providing much-needed support for businesses which could be forced to close, according to The Times.
The scheme will reportedly be made available to employers "as long as pubs, restaurants and other businesses" are shut, and will subsidise two thirds of the wages of staff working in those establishments.
The report follows mounting concern over the potential impact of further lockdown restrictions in parts of England.
Earlier on Thursday, pub bosses called for a full extension of the furlough scheme amid signs that Boris Johnson was considering sweeping closures in the north of England within the next few days.
The existing furlough scheme had been set to come to an end on October 31 and was expected to be replaced by a Job Support Scheme that would provide support for staff working at least a third of their hours.
However, many in the hospitality industry had been critical of the new scheme, warning that it would not be enough to support jobs.
On Thursday, Nick Mackenzie, chief executive of Greene King, said: "The new Job Support Scheme does not go far enough. It is imperative that we have a furlough scheme to protect jobs and other costs through the winter."
Other major operators had also warned they would need to make staff redundant if the furlough scheme came to an end.
The industry is bracing for a hit from potential closures in the North should the UK follow the lead of Scotland, where pubs and restaurants have been ordered to close in an effort to bring down rates of Covid-19.
Already, establishments have been battling with tougher restrictions on trading such as the 10pm curfew, which pub bosses say have cut down footfall.