Ministers will slash England’s travel red list to about a dozen countries, but plans for replacing the requirement for a negative PCR test with a lateral flow one to avoid isolation hang in the balance.

Destinations including Brazil, Mexico and South Africa are expected to be moved off the red list on Thursday, meaning passengers returning from them will not have to isolate in a hotel for 11 nights at a cost of more than £2,000.

The move means restrictions at the border will be at their loosest since the third lockdown began nine months ago.

The Foreign Office has also announced it will drastically overhaul its travel advice. Currently, it still issues advice to people not to travel to some non-red list countries for all but essential reasons based on Covid grounds.

This is separate to the health rules which are led by the Department for Transport, but significant because the discrepancy meant that travellers going to non-red list countries were not covered by normal travel insurance and so had to pay substantially more. The FCDO is no longer advising against non-essential travel to 32 countries and territories – including Algeria, Ghana and Malaysia – and will only reimpose it solely for Covid reasons “in exceptional circumstances such as if the local healthcare system is overwhelmed”.

Given the current Covid vaccines have held up against the Delta variant, which is dominant in the UK and increasingly usurping other variants overseas, government insiders are increasingly confident the move to slash the red list is safe.

However, ministers also hoped to be able to announce that PCR tests – which travellers have to test negative with to avoid isolation from non-red list countries if they are fully vaccinated – were being replaced with significantly cheaper lateral flow ones.

A source with knowledge of the discussions said the idea was still “up in the air” and “not settled yet”, sparking fears the change could be delayed until after the October half-term, when many people would be looking to take advantage of relaxed travel rules.

The final decision will be made in a meeting on Thursday morning and is expected to be announced that afternoon. Given health restrictions are a devolved matter, it will be up to the administrations in Scotland, Wales and Northern Ireland to decide whether to follow suit.

Brazil and South Africa have faced the toughest restrictions longer than almost any country, as they were both put on the red list in January owing to fears that the Gamma and Beta variants that were discovered in the two countries respectively were more resistant to vaccines. Pockets of Beta cases sprang up in the UK, but Delta was then imported from India and began to outstrip most other variants owing to its high transmissibility.

There are 54 countries on the red list, which include all of those in mainland South America and southern and eastern Africa. The London-based World Travel and Tourism Council, which represents industry firms, said the sector’s recovery would continue to be “sluggish” owing to policies such as the red list.

The government has been criticised by Tory MPs – including the former prime minister Theresa May – for not unlocking international travel as fast as many other countries. Over the summer, she said it was “incomprehensible” that the UK – being “one of the most heavily vaccinated countries in the world” – was the “most reluctant to give its citizens the freedoms those vaccinations should support”.

Gradual changes have been made to the rules, including most recently the axing of the three-tier traffic light system that graded countries red, amber or green. There is now only a red list, and all other countries that do not feature on it are treated the same. However, there are still different rules for those who are fully inoculated and those who are not, partly in an attempt, government sources have said, to encourage everyone to get both jabs.

The transport secretary, Grant Shapps, said this week: “We are accelerating towards a future where travel continues to reopen safely and remains open for good, and today’s rule changes are good news for families, businesses and the travel sector.

“Our priority remains to protect public health but, with more than eight in 10 people now fully vaccinated, we are able to take these steps to lower the cost of testing and help the sector to continue in its recovery.”