Compensation for traders affected by the closure of the Central Line has been ruled out by London Underground.

After considering the issue, London Underground Managing Director Paul Godier said that compensation would set a precedent that could end up costing London Underground millions of pounds a year.

Following a meeting with London Assembly Member for Redbridge and Havering Roger Evans, the company has agreed to allow a rent rebate for any Central Line retail tenant who asks for one.

Mr Evans said: "I am delighted that London Underground has agreed to give Central Line traders a rebate.

"It will be some compensation for what has been a very difficult time for them and I hope that business will return to normal now the Central Line services are up and running again."

A London Underground spokesman said: "We offer tenants a much lower rent than they get on the open market but we cannot guarantee that the stations will always be open.

"When they take out their contracts we tell them it's a good idea to take out insurance against obstruction of trade."

The settlement however leaves neighbouring businesses nursing their wounds after a three month period that has seen trade fall by as much as 50 per cent in the areas around the stations.

One of the traders featured in the Guardian during the Central Line chaos was Lauren Hole of Tiger Lilys florists.

Another was pet shop owner Brenda Perks, who runs Woodford Livestock and Gardens in George Lane, South Woodford, who said: "I can't say I am surprised. I think they should have offered compensation, or at least they could have sent a letter to people apologising and keeping them informed.

"Business is improving a little bit now but the people aren't back because there is only a limited service.