Boeing's embattled Dreamliner aircraft may face restrictions on permitted flying hours on specific routes even after the US regulatory officials approve its revamped battery system.

According to a Reuters report that cited industry experts and government sources, the Federal Aviation Administration (FAA) may seek to cut extended operations or ETOPS for the 787 jet temporarily, limiting it to shorter distances.

Dreamliner aircraft across the globe were grounded two months ago after its lithium ion battery system sparked safety concerns.

At a recent press conference Boeing denied any discussions on ETOPS with the regulators. But the issue is gathering interest as Boeing successfully conducted initial tests on the revamped battery after suggesting that the jet could be back in the air within "weeks".

The loss of ETOPS could be a major blow to the firm, as the sophisticated Dreamliner jet is considered efficient across long distances. Boeing is expected to have already lost about $450m (£296.7m/€350m) in revenue and compensation costs due to the grounding of the 787s.

"If the FAA approves [only] over-land operations it would be a very damaging blow to the 787 program," Scott Hamilton, an aviation analyst with Leeham Co in Seattle told Reuters.

"Depending on how long that restriction remains in place, it would completely undermine the business case for the airplane, which was to be able to do these long, thin intercontinental routes" over water, he added.

Earlier, before the flights were grounded in January, Dreamliners were allowed to operate in routes ranging up to three hours distance from an airport.

Boeing wanted this to be increased to five and a half hours, which could widen the route-scope of the aircraft. But now it looks set to lose ETOPS approval or be limited to two hours range.

Speaking to Reuters, an unnamed Japanese regulatory source said that limiting ETOPS will not come as a surprise, adding that the two-hour limit may force Japanese airlines to take roundabout routes that could affect fuel efficiency.

Japan's All Nippon Airways (ANA) and Japan Airlines (JAL) are key customers for Boeing. Although restricted ETOPS will not affect all international routes, services such as JAL's Tokyo-Boston service could take a hit.

A former senior US government official also reportedly indicated that there is a chance that FAA could impose the curbs after it approves the battery fixes. Some experts have added that a gradual return to extended operations could allow regulators to assess the battery changes.

FAA has said that it is too early to speak on the matter as the battery issues are still under review.