The government's proposal to end tax breaks for holiday property owners from April 2010 has prompted ministers in Cardiff to petition the Treasury to repeal the decision.

The Welsh Assembly Government is concerned that the budgetary decision could force people into bankruptcy, have a damaging impact on the tourism industry in Wales and make it more expensive for people to holiday in the area.

The new measures will put an end to home owners nationwide from using their properties to defer capital gains tax payments, offsetting losses made on their investments against their income and from receiving capital allowances.

The Welsh Conservatives estimate that such measures could cost a person running a furnished holiday lettings business an average of £4,000 per year more in tax.

Shadow heritage minister Alun Cairns said: "The government's decision to abolish the rules on holiday lets could have damaging consequences for the tourism industry in Wales. These changes affect the financial viability of small businesses operating in the tourism industry and could turn a small profit into a large loss.

"We are pleased the Assembly Government has answered our call and is challenging the decision. But I am concerned that the Treasury appears not to have consulted with counterparts in the devolved administrations or the tourism industry as a whole. Just as they did with the 10p tax rate issue, Labour has failed to consider just how damaging their actions can be to individuals directly affected by them."