British merchant ships sailing off the coast of Somalia will soon be able to carry armed guards to ward off pirate attacks, prime minister David Cameron said on Sunday.
Britain is one of only a few countries with major shipping fleets to currently ban armed guards on its vessels, alongside countries such as Japan, Greece and the Netherlands.
However, owners of ships from other countries are increasingly putting guards onboard as national navies struggle to combat Somali piracy in the Indian Ocean, a problem which is costing the world economy billions of dollars a year.
In an interview with the BBC, Cameron said that Britain now planned to license guards to carry firearms on ships.
"The evidence is that ships with armed guards don't get attacked, don't get taken for hostage or for ransom and so we think this is a very important step forward," Cameron said.
"The fact that a bunch of pirates in Somalia are managing to hold to ransom the rest of the world and our trading system I think is a complete insult," he added.
The International Chamber of Shipping, which represents over 80 percent of the world's merchant fleet, said that arming guards was likely to be effective in deterring pirates for now, but was not a long-term solution.
"Whilst we welcome it, it is a short-term palliative measure," ICS secretary general Peter Hinchliffe told Reuters.
He said the ICS was concerned that the decision could set a precedent for merchant ships, rather than naval vessels, becoming responsible for fighting off pirate attacks, and worried about an escalation of violence.
"To date no ships with armed guards on board have been captured. But pirates will respond with increased firepower to overwhelm the armed guards, and when that happens the impact on the crew will be pretty dreadful," Hinchliffe said.
The planned exemptions to Britain's strict firearms laws could allow guards to carry revolvers, automatic weapons or even rocket launchers on board.
A spokeswoman for Britain's Home Office (interior ministry) said that a licensing scheme would start within a month, and that the weaponry allowed would be "appropriate and proportionate".
Licences would restrict use of the weapons to off the Somali coast, the Gulf of Aden, the Arabian Sea and parts of the Indian Ocean. Britain's Transport Ministry said it expected around half the 200 British ships which sail through those waters to want to use armed guards.
Somali pirates, operating from the shores of the lawless state in the Horn of Africa, have raked in millions of dollars a year in ransoms from scores of hijacked ships from around the world, including oil super tankers.
Last month the shipping industry called on the United Nations to create an armed military force to be deployed on vessels to counter the escalating menace from the armed seaborne gangs.
Hinchliffe said the ICS wanted to see more arrests of suspected pirates, military attacks on pirates' Somali supply bases and a naval blockade 12 miles off the country's coast.
Better armed and increasingly violent pirate gangs are set to ramp up attacks in the coming weeks in the Indian Ocean as the monsoon ends.
Around 17 ships are currently being held by the pirates who can operate hundreds of miles from the Somali coast.
Negotiations often take many months before the ships and crews are released for ransom. The Socotra 1, a Yemeni-owned ship, was seized on Christmas Day 2009 and is still being held.