The tour operator Thomas Cook has ceased trading with immediate effect after failing in a final bid to secure a rescue package from creditors.
More than 150,000 British holidaymakers are currently abroad and will need to be repatriated as a result of the 178-year-old firm's collapse, the Civil Aviation Authority said.
The CAA said in a statement: "All Thomas Cook bookings, including flights and holidays, have now been cancelled. There are currently more than 150,000 Thomas Cook customers abroad, almost twice the number that were repatriated following the failure of Monarch.
"We know that a company with such long-standing history ceasing trading will be very distressing for its customers and employees and our thoughts are with everyone affected by this news."
The group's four airlines will be grounded and its 21,000 employees in 16 countries, including 9,000 in the UK, will be left unemployed.
The company also operated around 600 UK high street stores.
The Civil Aviation Authority (CAA) said the Government had asked it to launch a repatriation programme over the next two weeks, starting on Monday and running to Sunday 6 October, to bring Thomas Cook customers back to the UK.
The CAA statement said: "Due to the unprecedented number of UK customers currently overseas who are affected by the situation, the Civil Aviation Authority has secured a fleet of aircraft from around the world to bring passengers back to the UK with return flights.
"Passengers in a small number of destinations may return on alternative commercial flights, rather than directly through the Civil Aviation Authority's flying programme. Details and advice for these passengers are available on the dedicated website.
"Due to the significant scale of the situation, some disruption is inevitable, but the Civil Aviation Authority will endeavour to get people home as close as possible to their planned dates. This will apply to both Atol protected passengers and those who are not protected.
"Customers currently overseas should not travel to the airport until their flight back to the UK has been confirmed on the dedicated website.
"Thomas Cook customers in the UK yet to travel should not go to the airport as all flights leaving the UK have been cancelled."
Richard Moriarty, chief executive of the CAA, said it had launched "what is effectively one of the UK's largest airlines" in order to repatriate British holidaymakers.
He said: "News of Thomas Cook's collapse is deeply saddening for the company's employees and customers, and we appreciate that more than 150,000 people currently abroad will be anxious about how they will now return to the UK.
"The government has asked us to support Thomas Cook customers on what is the UK's largest ever peacetime repatriation.
"We have launched, at very short notice, what is effectively one of the UK's largest airlines, involving a fleet of aircraft secured from around the world. The nature and scale of the operation means that unfortunately some disruption will be inevitable. We ask customers to bear with us as we work around the clock to bring them home.
"We urge anyone affected by this news to check our dedicated website, thomascook.caa.co.uk, for advice and information."
"We have worked exhaustively in the past few days to resolve the outstanding issues on an agreement to secure Thomas Cook's future for its employees, customers and suppliers," Mr Fankhauser said.
"Although a deal had been largely agreed, an additional facility requested in the last few days of negotiations presented a challenge that ultimately proved insurmountable.
"It is a matter of profound regret to me and the rest of the board that we were not successful.
"I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years."
"Despite huge uncertainty over recent weeks, our teams continued to put customers first, showing why Thomas Cook is one of the best-loved brands in travel," Mr Fankhauser added.
"Generations of customers entrusted their family holiday to Thomas Cook because our people kept our customers at the heart of the business and maintained our founder's spirit of innovation.
"This marks a deeply sad day for the company which pioneered package holidays and made travel possible for millions of people around the world."
Transport Secretary Grant Shapps announced the Government and CAA has hired dozens of charter planes to fly customers home free of charge.
In a statement, the Department for Transport (DfT) said all customers currently abroad with Thomas Cook who are booked to return to the UK over the next two weeks will be brought home as close as possible to their booked return date.
Thomas Cook package holiday customers will also see the cost of their accommodation covered by the Government, through the Air Travel Trust Fund or Atol scheme, the DfT said.
Mr Shapps said: "Thomas Cook's collapse is very sad news for staff and holidaymakers.
"The Government and UK CAA is working round the clock to help people.
"Our contingency planning has helped acquire planes from across the world - some from as far away as Malaysia - and we have put hundreds of people in call centres and at airports.
"But the task is enormous, the biggest peacetime repatriation in UK history. So there are bound to be problems and delays.
"Please try to be understanding with the staff who are trying to assist in what is likely to be a very difficult time for them as well."
Business Secretary Andrea Leadsom said she would write to the Insolvency Service to ask them to "fast-track" their investigation into the circumstances surrounding Thomas Cook going into liquidation.
The investigation will also consider the conduct of the directors, the Department for Transport said.
Mrs Leadsom said: "This will be a hugely worrying time for employees of Thomas Cook, as well as their customers. Government will do all it can to support them.
"I will be setting up a cross-government taskforce to monitor local impacts, will write to insurance companies to ask them to process claims quickly, and stand ready to provide assistance and advice.
"I will also be writing to the Insolvency Service to ask them to prioritise and fast-track their investigation into the circumstances surrounding Thomas Cook going into liquidation."
Fosun Tourism Group, which noted it is a "minority investor with no board representation" in Thomas Cook, issued a statement after the travel operator's collapse.
"Fosun is disappointed that Thomas Cook Group has not been able to find a viable solution for its proposed recapitalisation with other affiliates, core lending banks, senior noteholders and additional involved parties.
"Fosun confirms that its position remained unchanged throughout the process, but unfortunately other factors have changed.
"We extend our deepest sympathy to all those affected by this outcome."
In a statement, the syndicate of Thomas Cook's lenders said: "Unfortunately, and notwithstanding the efforts of all stakeholders, the £1.1 billion funding requirement to adequately recapitalise Thomas Cook has ultimately proved too significant. The Lenders providing finance facilities to the Group have been extremely supportive stakeholders, including through two periods of financial distress and have stood behind Thomas Cook over the past twelve months, a period where the Group saw cash outflows of about £1 billion, maintaining that position over the crucial and busy summer holiday period.
"Obviously, the Lenders are deeply disappointed that it has not proved possible to rescue Thomas Cook. In partnership with other stakeholders, the Lenders worked tirelessly to examine all options within the timeframe required."