The decision will cost Boeing billions of dollars in compensation to airlines which have already placed orders for the fuel-efficient Dreamliner aircraft. These carriers include Singapore Airlines, British Airways and Virgin Atlantic.

Boeing announced that the Dreamliner will now take its first test flight in the fourth quarter of this year, and that deliveries will be scheduled for the third quarter of next year.

This is the third time Boeing has delayed the launch of the aircraft since October last year.

Boeing has blamed the rescheduling on slower than expected completion of work that has to travel from supplier facilities to the final assembly line, unanticipated rework as well as the addition of margin to the testing schedule.

'While the fundamental technologies and design of the 787 remain sound, we have inserted some additional margin for dealing with other issues we may uncover in testing prior to the first flight and in the flight test programme,' said Boeing Commercial Airplanes president and chief executive Scott Carson.

'Our revised schedule is built upon an achievable, high-confidence plan for getting us to our power-on and first-flight milestones,' he said.

Boeing is also thought to be ready to postpone or even scrap one of the three variants of the aircraft to enable its engineers to focus on solving the existing problems, the London Times reported.

Senior executives are expected to face calls to resign, the report said.

'This is a massive blow to Boeing's credibility because it is drip feeding bad news, which gives the impression it does not have a handle on the problems,' said Mr Doug McVitie, managing director of Arran Aerospace, an aviation industry analyst.

The 250-seater Dreamliner, Boeing's first new model in more than a decade, was designed using high-tech plastic composites instead of aluminium. The design takes advantage of the huge advances made in aviation technology in the past decade.

Up to 50 per cent of the primary structure of the plane - including the fuselage and wing - are made of composites such as carbon-fibre, which reduce its weight.

Boeing, which aims to build about 2,000 Dreamliners over the next two decades, maintains that the jet will consume 20 per cent less fuel then similar-sized planes already on the market.

The American company hopes the Dreamliner will be used to open up profitable flights between global cities which so far have no direct links such as Seattle-Shanghai, Boston-Athens or Madrid-Manila.

The news of this latest setback comes as Boeing and European aviation giant Airbus engage each other in a heated battle for supremacy of the skies.

AGENCE FRANCE-PRESS