A second airport for Sydney will be built at Badgerys Creek, in the city's west, after receiving Federal Government approval.
Prime Minister Tony Abbott announced Cabinet had signed off on the project on Tuesday morning, the ABC reported.
Badgerys Creek, about 50 kilometres west of Sydney's central business district, was first suggested as the location for a second airport in 1969.
"This amounts to a jobs package for western Sydney because when fully operational we believe that this will lead to 60,000 new jobs in western Sydney," Mr Abbott said.
"It is essentially going to be an infrastructure package for western Sydney, a long overdue infrastructure package for western Sydney that does also involve an airport."
Mr Abbott said the planning and design work will start immediately and he expected its construction would begin in 2016.
Government projections said the airport would sustain 35,000 jobs by 2035 and by 2060 it was anticipated it could be drive gross domestic product growth worth $A24 billion.
The private sector that will bear "the vast bulk of the cost" of the airport's construction, Mr Abbott said.
"There will be some expense to the Commonwealth in terms of planning and design, but the $A2.5 billion - which is widely quoted as the cost of building the airport itself - is something that will come from the private sector," he said.
Residents divided
The announcement of a new airport for Badgerys Creek has divided residents in western Sydney, with some voicing concern about the project's impact on local infrastructure and the environment, the ABC reported.
Bettini Dauner said while she would be directly affected, she had lived with the prospect of the airport for many years and faced an uphill battle in stopping it.
"I probably won't be able to live in my property because I'm fairly high up," she said.
"I'm in the red zone of the noise level. We are living busy lives, and you don't really have a lot of time to protest and so forth, and it's been going for so long.
"They were talking about Badgerys Creek when they were talking about Mascot, so it's been going forever."
But university student Sandra Inzytar was not as worried about the noise and said she was more excited that the airport would mean better access to transport.
"There is only one airport in the city and it is pretty busy to get there," she said.
"I live just 5 minutes away, the airport [Badgerys Creek] will be so close to me...good to just fly overseas."
Some community and lobby groups, however, are prepared to fight the decision.
