Travel firm Sun4U has collapsed, leaving approximately 1,200 customers stuck abroad.
The firm's website said it had ceased trading and advised people to contact claim handlers for Abta - The Travel Association.
Most of the company's stranded customers are said to be in Spain.
Abta said those with Air Travel Operators' Licensing (Atol) packages should be able to continue with their holidays as planned.
A spokesman said: "There are approximately 1,200 people away at the moment and most of them are in Spain.
"Anyone who has booked a package holiday must contact the Civil Aviation Authority (CAA) or contact the supplier named on their invoice."
The Birmingham-based firm's website advised customers to phone claim handlers CEGA on 01243 621 500.
It is unclear how holidaymakers currently abroad will be repatriated.
'Paying twice'
Patricia Cambridge's daughter is on holiday at the moment and has been asked to pay for her accommodation for a second time.
She told the BBC: "She was told that they would have to pay £438 for the self-catering holiday, plus 10 euros a day if they wanted half-board. They'd actually booked a half-board holiday and paid Sun4U for that holiday."
Sun4Udirect.com advertised a "dynamic packaging" service offering "much greater choice and greater flexibility" and a team of staff with "hundreds of years of experience" between them.
It specialises in holidays on the Spanish coast and Mallorca.
The Abta helpline advises passengers who booked a flight package under the company's Atol licence to call the Civil Aviation Authority on 0207 453 6350.
Holidaymakers who had bookings made with separate tour operators named on the invoice should contact them to confirm whether the booking is still in place.
Anyone with an invoice saying the booking was made with a hotel or a local agent and which will not be honoured, will need to repay the cost of the booking.
If any traveller's payment was originally made by Visa debit or credit card, refunds can be claimed via the card provider. There is no protection under the Abta bond if the booking was made by any other means.
BBC News
Surely they knew it was on the cards, why do they accept bookings and leave people stranded?