Passengers due to travel with Monarch before the airline collapsed will get refunds within a month - if they are Atol protected.
The Civil Aviation Authority, of CAA, revealed today it was expecting about 32,000 claims from holidaymakers, and the total cost of refunds could be £21 million.
But only those whose bookings were protected by an Air Travel Organiser's Licence, known at Atol, will automatically get their money back.
The vast majority of the 860,000 passengers who had flights and holidays cancelled will not receive an automatic refund, according to the airline's administrator KPMG.
Atol only covers package holidays or Monarch flight-only bookings made before December 15, meaning hundreds of thousands of people will be forced to seek refunds from their credit or debit card supplier or through travel insurance.
The CAA said customers, or their travel agents, with Atol protection will receive a claim form by October 11, with most claims expected to be processed within 28 days of receipt.
Chief executive Andrew Haines said: "We recognise there are many thousands of Monarch customers who will be bitterly disappointed that their holidays have been cancelled.
"Those who bought a package holiday from Monarch are Atol protected, which means they have full financial protection and are entitled to a full refund of the cost of their holiday.
"By streamlining our processes and using experienced handlers, we aim to ensure claims are managed effectively and customers receive their refunds as quickly as possible."
More than 60 per cent of the 110,000 Monarch passengers who were abroad when the airline went bust are now back in the UK.
The remaining passengers are expected to be flown home by October 15 as part of the country's biggest peacetime repatriation.