Fully vaccinated people in Britain could be allowed to travel to countries on the government's amber list without the need to quarantine when they return home.
Under the current traffic-light system, travellers returning from green-list countries take Covid-19 tests but do not need to enter quarantine.
Amber country arrivals require a period of isolation at home or in a hotel as well as the tests, and red-country arrivals must enter quarantine in a managed hotel and have the tests.
There are more than 100 countries on the amber list, including top summer holiday destinations Spain, France, Italy and the US.
Jesse Norman, financial secretary to the Treasury, said the government was "looking at all the options" around international travel.
"We don't want to get left behind by countries which may be adopting a two jabs approach if it can be done safely and if it can be done carefully and securely," he said on Thursday.
Under the government plans, people who have had both doses of the Covid-19 vaccine will be allowed to avoid quarantine on their return from amber-list countries, although they will still have to be tested.
Health Secretary Matt Hancock, who wants tougher border restrictions, is reportedly open to the change, which would lead to the government offering a vaccine passport option on an official App.
Asked if people in Britain could make plans to travel abroad, Mr Norman said: "We are trying to move cautiously and progressively in the right direction, so I wouldn't write anything off at this point.
"But then we are in a situation where the virus is not something we control and we have seen this new Delta variant, so it would be imprudent to make any carte blanche or firm statement now."
Officials are still working on whether any new regime would be limited to returning Britons or all arrivals, what exemptions could be made for those who could not be vaccinated, and whether children under 18 should be exempt.
"Recognising the strong strategic rationale and success of the vaccine programme, we have commenced work to consider the role of vaccinations in shaping a different set of health and testing measures for inbound travel," a government spokesman said.
Britain allowed international travel to resume last month, but nearly all major destinations were left off its list of countries open for quarantine-free holidays.
A major airline joined English airports to launch legal action against the government over the traffic light system for international travel.
Ryanair, the low-cost Irish airline, and Manchester Airports Group (MAG) will file High Court papers on Thursday to seek clarity over the transparency of the system, a MAG representative said.
In April, the British government proposed a traffic light system, with countries falling into red, amber or green categories based on the perceived degree of Covid-19 risk.
Britain removed Portugal from its quarantine-free travel list earlier in June, leaving fewer than a dozen countries on the green list and sparking outrage from embattled airlines.
The court papers will argue that the British government should clearly explain how it makes decisions on categorising countries, given the dramatic effect these decisions have on the aviation industry.
"The current opaque way that decisions are being made is undermining consumer confidence to book summer holidays and makes it impossible for airports, airlines and other travel companies to plan for the recovery of international travel," the companies said.
Meanwhile, the EU us expected to recommend that member countries start lifting restrictions on tourists from the US.
EU ambassadors agreed to consider adding the US to the list of countries from which non-essential travel is allowed.