British Airways Holidays has cancelled plans to continue offering breaks to the Caribbean and elsewhere this weekend.
Despite the UK in lockdown and other firms halting holidays, the company was continuing sales from this Sunday.
However, on Friday BA Holidays said it had decided to withdraw package deals.
This week Tui, Jet2 and Virgin Holidays cancelled operations until mid-February because of the tighter rules.
In addition to trips to the Caribbean, BA Holidays was still offering breaks to Barbados, Costa Rica, Antigua and St Lucia.
The Gov.uk website clearly states: "You should not travel abroad unless it is permitted. This means you must not go on holiday."
In a reversal of its previous decision, BA Holidays told the BBC on Friday: "We've been in touch with customers due to travel in the coming days and weeks to offer a refund if their travel plans do not meet Government guidelines for permitted travel.
"As it's now clear most customers are travelling for leisure, we have decided to withdraw package deals from sale. Customers legally permitted to travel during the lockdown period remain able to book flights for their essential travel via ba.com."
The firm told the BBC earlier this week it is still selling breaks because business people use their holiday packages to aid their travel arrangements.
International travel in the last few months has flatlined, with tough border restrictions in place for entry into many destinations. This has meant many people have chosen to stay at home and demand has collapsed.
Last year was the toughest on record for the aviation industry, with airlines and airports reporting some of their worst results in their history. Tens of thousands of jobs have been lost.
Sophie Griffiths, editor of The Travel Trade Gazette, said the last ten months has been devastating for the sector.
"Most travel companies have reacted swiftly and fairly to the new lockdown rules, suspending their programmes and offering refunds or credit notes at a time when the UK travel industry continues to face immense challenges.
"The last ten months has been devastating for this industry, with companies rightly returning thousands of pounds in refunds but at the same time getting next to no money back in."
She added: "Unlike numerous other countries, the industry has still not received any dedicated support from the UK government. Despite this, the majority of travel firms have continued to support their customers and play by the rules."
On social media there has been a growing movement reacting to people who have chosen to go on holiday in recent weeks.
So called 'covid vigilantes' have been naming and shaming alleged rule breakers, who they believe disregard the health protocols set up to stop the spread of coronavirus.
In the USA, Gays Over Covid has been exposing groups of travellers who are perceived to be breaking the law when they have travelled.
The group exposes those who have attended events, large social gatherings and partied in large groups and importing Covid risks to foreign countries. There is no evidence that they have broken the law.
Earlier this week, it was confirmed that reality TV star Zara Holland will be prosecuted for allegedly breaking Covid rules on holiday in Barbados.
Island police say the former Miss Great Britain is expected to appear in court on Wednesday, accused of "breaching quarantine".