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The consumer goods company Diageo has responded to a boycott campaign by saying it will consider increasing compensation for victims of the Thalidomide drug which one of its constituent companies – Distillers – marketed in the 1950s.

The company pays Thalidomide victims £2.5million a year through the Thalidomide Trust, but new medical opinion suggests the health of victims is deteriorating and that they need more money.

A Diageo spokesman said managers were committed to discussing the issue with the Trust, which acts on behalf of the victims. But he said the company was ‘disappointed’ by a celebrity boycott of its products organised by the pressure group Thalidomide UK.

He claimed the campaign, which has attracted support from musicians and footballers, ‘began only a few hours after we met with Thalidomide UK and only a couple of days after we received the medical report.’

Diageo says it will also look at a proposal to extend payments to victims beyond 2009, when they are due to finish.

‘We are not just sitting back and letting this thing happen, but it will take time to talk these things through,’ said the spokesman.