Morocco is back on the road to recovery, with tourists heading out to the exotic, shorthaul destination again following the Iraq war and last month's suicide bombings in Casablanca, which left 41 dead.

Travel company Panorama Holidays said bookings had now recovered after a small number of cancellations following the attacks.

'Morocco is really popular, particularly with so many celebrities holidaying there,' said head of marketing Owen Whitehead.

Panorama runs a weekly charter from Gatwick to Marrakesh and Agadir during the winter and also offers holidays to Essaouira, Taroudant and Ouarzazate.

Meanwhile, Kuoni has expanded its Morocco programme with the introduction of more riads in Marrakesh and bolt-on packages to Fez. New upmarket properties included in the World Class brochure due out next month include Le Palais Rhoul in Palmeraie, just outside Marrakesh, and Riad Dar Donab near the city's medina.

However, Thomson Holidays has cancelled its package holiday programme, blaming the move on poor sales.

Thomson was due to run a weekly Britannia Airways charter flight from Gatwick to Agadir between this October and next April.

The small number of holidaymakers already booked on trips to the country have been offered alternative destinations or a full refund, said Thomson. Marrakesh will continue to be featured in Thomson's Cities and Short Breaks programme.

The Morocco Tourist Office expressed disappointment at Thomson's withdrawal but hoped the programme would be reinstated next year, noting that security had been tightened at airports and there was a stronger police presence in major towns and cities.

Ali El Kasmi, director of the Morocco Tourist Office, said Thomas Cook was hoping to launch a programme to the country from summer 2004. First Choice Holidays has also expressed an interest in introducing the destination.

The latest Foreign Office travel advice for Morocco is that it is one of a number of countries under threat from international terrorism. Travellers are urged to be 'extra vigilant' and avoid crowds and public places frequented by foreigners. Chris Lawrence, managing director of Morocco specialist The Best of Morocco, said Moroccans were bitterly disappointed that the bombings had 'blotted their copybook'.

'I think they were an isolated case. The Foreign Office travel advice scares the hell out of people. I am more worried about my daughter who lives in London than my son who lives in Marrakesh,' he said. Last year nearly 150,000 UK holidaymakers travelled to Morocco, an eight per cent increase on the previous year.

· Work has started at the first of six purpose-built resorts along the Moroccan coast. Nine miles north of Agadir, Taghazout will include six tourist villages, a spa centre, fishing port, marina and medina.