The government has sold off £3.5bn of shares since December, bringing the taxpayer’s stake in Lloyds to below 19%.
The trading plan, which was launched in December, was due to end in 30 June 2015 but has now been extended until 31 December 2015.
Chancellor George Osborne said: “We’re determined to get on with the job of returning Lloyds to private ownership.
“That’s why I’m extending the plan for six months so that we can make even more progress in returning money to the taxpayer and paying down the national debt."
So far Lloyds shares have been sold off for an average price of over 80p, up from the 73.6p originally paid for the shares.
The government said it will give retail investors details in due course about its share sales.
In the Budget the government pledged to sell off £9bn of Lloyds shares in 2015-2016.
