The government is proposing to make it illegal to discriminate against older people, which would ban insurers using age to judge risk unless they have "solid evidence" it would make a difference.

Insurers may also have to help customers find an alternative provider if they can not provide cover.

Plans announced by the Equalities Office will make it unlawful to unfairly discriminate against someone because of their age when providing goods and services.

Specific exceptions will allow companies to continue to offer beneficial services to certain age groups, for example free bus travel for over-60s or holidays aimed at people aged 30 and under.

The Equalities Office said: "Providers of financial services, such as insurance companies, will still be allowed to use age when assessing risk and deciding prices.

"However, the new law, which will take effect from April 2012, will mean they have to base such decisions on solid evidence rather than simply imposing a blanket ban.

"Insurers will also be asked to help people find an alternative provider if they are unable to provide cover for age-related reasons," it added.

Age discrimination in the workplace has been illegal since 2006 and the department said the decision to extend the ban to provision of goods and services follows the decision to phase out the default retirement age.

The new rules will apply to services provided by the public sector as well as by private companies, with full details available in a consultation that is open for three months.

Lynne Featherstone MP, the Equalities Minister said: "It's high time we put an end to outdated stereotypes based on age and recognised the valuable contributions that people of all ages can make to our society and economy.

"When older people are turned away from the market place through unfair treatment, the economy misses out on increased business and revenue. These proposals will ensure that doesn't happen, providing new protection and support for people of all ages.

"However, we don't want to throw the baby out with the bathwater, which is why we will allow businesses to continue to provide the age-specific services that many people of all ages benefit from every day," she added.