Climbers, who paid USD 11,000 each for a permit last year, quit their expeditions in droves when the April quake triggered an avalanche on Everest base camp that killed 18 people.
The quake marked the second year with almost no summits on Everest after the deaths of 16 Nepali guides in an avalanche in 2014 sparked a shutdown of the world's highest peak.
"The government has decided to extend permits for two years in order to compensate those climbers who could not continue their expeditions due to the earthquake," said tourism department chief Gobinda Bahadur Karki.
Following the disaster, Nepal is desperate to revive tourism including its mountaineering industry, key revenue-earners for the impoverished country that is home to eight of the world's 14 peaks over 8,000 metres.
"We hope the number of climbers will increase this year after the government's latest decision," Karki told AFP.
Industry insiders welcomed the move, but said the delay in making the decision had left operators with little time to organise expeditions.
"We are not happy that the government decided on this so late. Had the decision come earlier, expedition teams would have a little more time for preparations," said Ang Tshering Sherpa, president of Nepal's mountaineering association.
Kathmandu last year agreed to extend Everest climbing permits until 2019 for foreign mountaineers already holding one, following the 2014 shutdown of the 8,848-metre (29,035-foot) high peak.
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