The £33bn proposals include £21bn for the runway alongside £12bn for associated terminal infrastructure.
HAL will also invest £15bn into the existing airport to modernise and upgrade current facilities- these works are independent of a third runway and will go ahead regardless of a planning decision for expansion.
The decision means rival expansion plans put forward by billionaire hotel entrepreneur Surinder Arora will miss out.
Transport Secretary Heidi Alexander confirmed the decision on Tuesday morning.
She said: “Following a comparative assessment of the remaining proposals for Heathrow expansion, the government’s view is that the north-west runway scheme brought forward by Heathrow Airport Limited offers the most credible and deliverable option.
“Today is another important step to enable a third runway and build on these benefits, setting the direction for the remainder of our work to get the policy framework in place for airport expansion. This will allow a decision on a third runway plan this parliament which meets our key tests including on the environment and economic growth.”
An application for development consent for a Northwest Runway will now be brought forward by Heathrow Airport Limited.
HAL said: “We welcome the Government’s support for our scheme to build a third runway at Heathrow – the UK’s gateway to growth. Expanding Heathrow will mean more connectivity, increased trade, improved passenger experience and a huge economic boost for the British businesses that will help design and build it.
“However, we still need further clarity as to how the crucial next phase of the project will be regulated. We need definitive decisions from the CAA and Government by mid-December so that delay to the project can be avoided and we can get on with delivering this vital project for our customers and for the UK.”
The winning scheme requires major works to the M25 costing £1.25bn.
