"The government today announced its support for a new runway at Heathrow -- the first full length runway in the southeast since the Second World War," an official statement said after a cabinet meeting.
"A new runway at Heathrow will bring economic benefits to passengers and the wider economy worth up to £61 billion (69 billion euros, $75 billion)."
It said up to 77,000 additional local jobs are expected to be created over the next 14 years, while the airport has committed to create 5,000 apprenticeships over the same period.
Following Britain's vote in June to leave the European Union, the government said the decision would show commitment to being "open for business now and in the future and as a hub for tourism and trade".
But there is strong environmental opposition to the expansion and the approval process could still delay or even block its execution over the coming years.
Ministers opposed to the plans will be granted the rare opportunity to voice their dissenting views, including Foreign Secretary Boris Johnson, the former mayor of London, and Education Secretary Justine Greening.
The government rejected a rival bid for a second runway at Gatwick airport south of the capital, which was backed by current London Mayor Sadiq Khan.
"This is the wrong decision for London and the whole of Britain," Khan said, adding that he would look into the possibility of legal action.
"A new runway at Heathrow will be devastating for air quality across London -- air pollution around the airport is already above legal levels of NO2."
- 'Enormous relief' -
The decision marks the beginning of a lengthy process before the project can begin in earnest, including a year until it can receive full parliamentary approval.
Business leaders, many of whom have long campaigned for a third runway, say London's five existing airports are not keeping up with rising air travel demand and hope expansion will send a strong message on London's economic post-Brexit future.
Paul Drechsler, president of the Confederation of British Industry (CBI) said the outcome was an "enormous relief" to firms across the country.
"A new runway at Heathrow is really fantastic news, especially as the country has waited nearly 50 years for this decision," he said.
Budget airline easyJet said it would build up its operations to include an expanded Heathrow airport, which it says benefits the economy and passengers.
"This is good news for UK consumers and businesses and will help ensure that the UK is better connected to the rest of the world," said easyJet CEO Carolyn McCall.
But environmentalists are fiercely opposed to any airport expansion in the British capital, parts of which already routinely breach EU air pollution limits, and now threaten legal action.
Prime Minister Theresa May's local council of Windsor and Maidenhead, an area to the west of the airport, has also protested against Heathrow expansion.
- 'Ready to fight' -
Activists held a protest Tuesday in anticipation of the announcement, blocking a fake runway set up outside parliament.
"People are going to be ready to fight this decision," said Annie Wright, of Reclaim the Power, one of the groups staging the demonstration.
"If you want to honour your commitment to climate change you cannot build new runways."
The plans also face opposition from West London lawmakers and residents, including Conservative MP Zac Goldsmith who intends to resign and trigger a by-election in his Richmond constituency, the local Conservative Association confirmed.
Hundreds of homes would have to be demolished to accommodate a third Heathrow runway and the small village of Harmondsworth, on the edge of the airport, would be largely flattened.
On the small village green in front of the Five Bells pub and The Crown pub, banners have been put up against the expansion.
Paul Cooper, a taxi driver from the village, told AFP: "I feel sorry for the older generation. They don't want to be moving at their time of life. They should be looked after.
"They should give us compensation but I don't know if they will or they won't."
"It's a lovely village. It's a shame it's being knocked down."
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)