A relaxation of hours on New Year's Eve could save the industry £9m according to the House of Lords.
The Lords' deregulation committee has given its support to extended hours on December 31 and criticised the Government's handling of the issue.
The committee said the burden on licensees caused by them having to apply for a special order of exemption was "substantial" and could cost the industry £9m.
Up to 134,000 applications could be affected, which would inconvenience licensees, the police and magistrates. According to the committee, the "cost savings to the industry resulting from the proposal are estimated at £9m".
Government delays over the deregulation order which would relax hours were criticised by the Lords.
Committee members pointed out that giving licensees only a few weeks gave residents little time to object to an extension and publicans virtually no time to appeal.
After considering all the evidence, the Lords' deregulation committee gave its support to extended hours for this New Year, as well as the Queen's Golden Jubilee and possibly for subsequent New Year's Eves - providing this year is a success.
The trade welcomed the Lords' decision. Brigid Simmonds, chief executive of Business in Sport and Leisure, said: "I hope the Commons will take the same view. It is regrettable that technicalities have led to such uncertainty for the trade, but the outlook for New Year's Eve 2001 is now looking much more hopeful."
Despite the positive reaction from the Lords, the deregulation order is still unlikely to be passed before December.
Related stories:
Magistrates in New Year fury (25 October 2001)
Ministers stall over New Year (18 October 2001)