Image caption BP has raised the likely cost of compensation to individuals and businesses to $9.6bn (£6.19bn)

BP has lost a second attempt to suspend compensation payments over the 2010 Gulf of Mexico oil rig disaster.

The UK oil giant has said that fraud and false compensation payments are behind the escalating costs it faces.

But Judge Carl Barbier ruled that there was no "credible evidence of fraud" or that the compensation process was tainted by conflicts of interest.

BP said it continued to believe that the compensation system was being abused.

Former FBI director Louis Freeh is investigating allegations of misconduct in the claims program.

The oil company insists that the payouts should be suspended while Mr Freeh carries out his probe.

In an emailed statement to Bloomberg on Wednesday, BP said: "As we await the completion of this broad investigation [by Mr Freeh], we continue to believe a temporary pause in payments is warranted.

"BP is reviewing its options with respect to the district court's decision today."

The Deepwater Horizon oil rig explosion killed 11 workers and released an estimated four million barrels of oil into the Gulf of Mexico.

BP set up a compensation fund, initially estimating the cost of the settlement at $7.8bn (£5.03bn). The company has since raised the estimate to $9.6bn.