Monarch has been granted a 24-hour extension to its licence to sell package holidays.
The low cost airline and holiday company had a deadline of midnight on September 30 before its Air Travel Organiser's Licence (Atol) expired.
This allows the firm to sell Atol-protected holidays.
The Civil Aviation Authority (CAA) said: "We can confirm that Atol protection will remain available for eligible holiday bookings made with Monarch on Sunday."
This means that holidaymakers can buy Atol-protected trips from Monarch on Sunday, which will cover them from whatever date in the future their trip takes place.
It is Monarch's second such temporary extension in two years and follows a spotlight being shone on the carrier's finances.
A CAA statement said: "The Atol renewal process is ongoing and the CAA will conclude the processing of applications from approximately 1,300 Atol holders in the next 24 hours.
"In certain circumstances this could require a temporary extension to complete this process.
"In line with our usual practice, we will not comment on the specifics of any Atol holder's application until such time as the process has reached a resolution.
"However, we can confirm that Atol protection will remain available for eligible holiday bookings made with Monarch on Sunday.
"The CAA will provide a daily update with regard to the protection that is available to Monarch's customers."
Monarch, whose headquarters are at London Luton Airport, was founded in 1968.
It also operates from four other UK bases including London Gatwick, Manchester, Birmingham and Leeds Bradford to more than 40 destinations around Europe and further afield.
The company employs approximately 2,750 predominantly UK based staff, its website states.
UK travel firms selling holidays and flights are required to hold an Atol, which protects customers with pre-booked holidays from being stranded abroad in the event of circumstances such as the company ceasing to trade.