Its total provision could rise as high as £8bn, as much as the other three biggest banks combined.
The lender had hoped it had finally reached the final sum in the scandal three months ago, but there may have been another rise after it wrote to all affected customers to let them know they could claim.
And Sky News last night estimated the increase at £700m.
The expected rise in Lloyds’ PPI bill is not likely to be reflected in the rest of the industry. City watchdog numbers earlier this month showed complaints to it about PPI claims fell in the first half of the year, indicating the crisis is easing at last.
Lloyds declined to comment.